ROSENTHAL v. COATES 148 U.S. 142 (1893)

Statement by Mr. Justice BREWER:

[148 U.S. 142, 144]   On August 3, 1878, the Mastin Bank of Kansas City failed, and also executed a deed of general assignment to Kersey Coates for the benefit of all creditors. Coates accepted and administered the trust. At the time of the failure the Mastin Bank had on deposit in the Metropolitan Bank of New York a large sum,-$50,000 and over,-that bank being its New York correspondent. It had, prior to August 3d, and in the regular course of business, drawn and sold drafts on the Metropolitan Bank to different parties. One of the parties holding such drafts was Rosenthal, the appellant. He brought suit in New York city to secure payment from the Metropolitan Bank out of the funds in its hands, but the decision of Mr. Justice Blatchford, then judge of the circuit court of the United States for the southern district of New York, into which court the case had been removed, was adverse to his right to appropriate any portion of that fund to the payment of his draft. Rosenthal v. Bank, 17 Blatchf. 318. It would seem from the opinion that the case proceeded no further than to sustain a demurrer to the bill, with leave to the plaintiff to move on notice, etc., for an amendment. What orders, if any, were entered thereafter in that case are not disclosed by this record. [148 U.S. 142, 145]   On June 23, 1881, Coates, as assignee of the Mastin Bank, filed in the circuit court of Jackson county, Mo., a petition, in which he set forth the failure of the bank; the assignment; his acceptance of the trust; the amount of the deposit in the Metropolitan Bank to the credit of the Mastin Bank at the time of the failure, which deposit had subsequently passed into his hands; the fact that various drafts had been drawn by the latter on the former bank prior to the failure, which drafts were outstanding and unpaid; and that the holders of these drafts claimed the right to have that fund appropriated specially to the payment of their drafts. The holders of the drafts were made parties defendant, and the prayer was, substantially, that their rights in this fund be determined; to which petition Rosenthal, among other defendants, answered. He admitted the charge made in the petition that a decree adverse to his claim of payment out of that fund had been rendered in the circuit court of the United States for the southern district of New York, but, nevertheless, claimed the benefit of a different line of decisions obtaining at that time in the trial courts of Missouri. This case came on regularly for hearing in the state trial court, and a decree was there entered directing Coates, the assignee, to pay all the other holders of drafts in full out of that fund, it being conceded to be sufficient in amount, but denying Rosenthal any right therein, by reason of the prior adjudication in New York city. From such decree Coates and Rosenthal both appealed; Coates, however, gave no supersedeas bond. When the case reached the supreme court, the question involved having been recently theretofore presented in another case, and decided adversely to the right of the holders of these drafts to payment out of such fund, that court simply entered an order reversing the decree of the circuit court, and remanding the case for further proceedings. No special notice seems to have been taken of the fact that the decree of the trial court was adverse to Rosenthal, and, in accordance with the conclusions of the supreme court, should have been affirmed. When the case returned to the circuit court, and before it was reached for further hearing, Coates had paid all the other holders of [148 U.S. 142, 146]   drafts. Thereupon Rosenthal filed a petition for removal to the circuit court of the United States for the western district of Missouri, he being a citizen of New York and Coates a citizen of Missouri. This petition for removal was filed on February 10, 1885. The record having been transmitted to the federal court, a motion was made to remand, and, on October 25, 1886, it was sustained, and from this order remanding the case to the state court Rosenthal has appealed to this court.

O. H. Dean and Geo. Hoadly, for appellant.

T. A. Frank Jones, for assignee of Mastin Bank.

Mr. Justice BREWER, after stating the facts in the foregoing language, delivered the opinion of the court.

The motion to remand was properly sustained. No removal could be had under the act of 1875, because the application was not made before or at the term at which said cause could be first tried. The case had been once tried in the circuit court, and thereafter reversed on appeal by the supreme court of the state.

Neither could it be removed on the ground of local prejudice, which is one of the grounds set forth in the petition for removal, because such removal can be had only where all the parties to the suit on one side are citizens of a different state from those on the other. Jefferson v. Driver, 117 U.S. 272 , 6 Sup. Ct. Rep. 729. Here, several of the defendants were citizens of Missouri,-the same state that Coates was a citizen of. Neither did the payment by Coates to the other defendants change the status of the suit. The petition did not disclose a separable controversy between Coates, the assignee, and Rosenthal, or any other holder of a draft, but a single controversy between him and all the defendants. Looking back of the form to the substance, it will be seen to have been one between all the creditors of the Mastin Bank as a body, represented by Coates, the assignee, as plaintiffs, and the defendants as another body; and the question was whether this fund should [148 U.S. 142, 147]   be applied solely to the payment of the claims of the latter, or distributed generally among all of the former. Whether the fund was sufficient to pay all of the draft holders in full or not was, therefore, immaterial. It was not enough to pay all the creditors, and they collectively, and as represented by the assignee, Coates, were the real party in interest on the other side. The suit was, in effect, one by the assignee to disincumber this fund in his possession of alleged liens, and the fact that each defendant had a separate defense to this claim did not create a separable controversy as to him. Safe Deposit Co. v. Huntington, 117 U.S. 280 , 6 Sup. Ct. Rep. 733; Graves v. Corbin, 132 U.S. 571, 586 , 10 S. Sup. Ct. Rep. 196; Young v. Parker's Adm'r, 132 U.S. 267 , 10 Sup. Ct. Rep. 75. Nor did any defendant create a separable controversy, by simply petitioning in his answer for payment out of that fund.

The appellant relies on the case of Yulee v. Vose, 99 U.S. 539 . But in that case there was a separable controversy, and one in fact separated by the decision of the court of appeals of the state of New York. The case of Brooks v. Clark, 119 U.S. 502 , 7 Sup. Ct. Rep. 301, is more in point. See, also, Shainwald v. Lewis, 108 U.S. 158 , 2 Sup. Ct. Rep. 385; Torrence v. Shedd, 144 U.S. 527 , 12 Sup. Ct. Rep. 726. The other defendants, although they have received the amounts due on their drafts, are not necessarily eliminated from this suit. Payments were made by Coates pending an appeal, under a mistaken notion of the law. He may be entitled to a decree declaring that they have no recourse upon this special fund, and then, perhaps, pursue some remedy to recover what he has erroneously paid. It is unnecessary to speculate what may be done. It is enough that they are still parties to the record, against whom some relief may be had, and that there is no separable controversy between the assignee and any defendant.

Further, to sustain this removal would certainly violate the spirit of the removal acts, which do not contemplate that a party may experiment on his case in the state court, and, upon an adverse decision, then transfer it to the federal court. Here, Rosenthal has gone through the state trial and appellate courts, and his rights have been finally declared by the supreme court of the state; and though, as yet, no formal [148 U.S. 142, 148]   decree has been entered in the trial court, it is none the less true that he has experimented with the state courts and been beaten, and now seeks a different forum. Jifkins v. Sweetzer, 102 U.S. 177 .

The order to remand is affirmed.