Brainerd Shaler Hall Quarry Company v. Brice/Opinion of the Court

The Quarry Company brought an action at law in the District Court of the United States for the Southern District of New York to recover $20,000 and interest from Wilson B. Brice as executor of Henry Van Schaick, deceased, and the American Surety Company. Answers were filed and the case was at issue, and came on for trial, when, upon motion of the defendants, the action was dismissed for want of jurisdiction. The only question here concerns the correctness of this ruling of the District Court. The ground of the dismissal is thus stated in the record:

'In this cause I hereby certify that this writ of error is     allowed solely, and that the order herein dismissing the      complaint was based solely, on the ground that no      jurisdiction of the District Court existed; that this      question has been determined by me on the following grounds:

'This action is brought on a surety bond made by one Henry     Van Schaick (since deceased) as principal, and the defendant      the American Surety Company of New York, as surety, for the      purpose of securing the due payment, at Henry Van Schaick's      death, of the remainder interests in a certain fund of money      held by Henry Van Schaick as life tenant; that one Eugene Van      Schaick (since deceased) was at the time of the assignment      below mentioned the owner of one of the remainder interests      secured by said bond; that Eugene Van Schaick, during the      continuance of the life estate, assigned to the plaintiff a      portion of his said remainder interest, and thereafter      survived the said Henry Van Schaick, and this action is bases on such      assignment; that Eugene Van Schaick was in his lifetime a      citizen and resident of the state of New York, and both of      the defendants are citizens and residents of the state of New      York; that this suit could not have been prosecuted in this      court upon said remainder interest and said bond if no such      assignment had been made.'

Section 24 of the Judicial Code (Act March 3, 1911, c. 231, 36 Stat. 1091 [Comp. St. § 991]), among other things, provides:

'No district court shall have cognizance of any suit (except     upon foreign bills of exchange) to recover upon any      promissory note or other chose in action in favor of any      assignee, or of any subsequent holder if such instrument be      payable to bearer and be not made by any corporation, unless      such suit might have been prosecuted in such court to recover      upon said note or other chose in action if no assignment had      been made.'

To determine the character of the action for the purposes of jurisdiction recourse must be had to the allegations of the complaint. They are quite voluminous, but for our purposes may be summed up as stating: The plaintiff is a corporation of the state of Connecticut. The defendant the American Surety Company is a corporation of the state of New York. The defendant Wilson B. Brice is a resident and citizen of the state of New York. (It was conceded for the purposes of the motion that Eugene Van Schaick was a citizen of New York.) Jane C. Van Schaick died May 20, 1893, seized of certain real estate in the state of New York. By her last will and testament she gave one-half of her real estate to Henry Van Schaick, of New York, during his life, with remainder to his descendants who should be living at the time of his decease and living also at the time of the testatrix's decease, if she should survive him. The will was duly probated on June 28, 1893. Henry Van Schaick survived the testatrix, and had living children, one of whom was Eugene Van Schaick. The complaint then recites certain conveyances, and the prosecution of a partition suit, the decree in which was, by order of the court, considered upon the motion to dismiss. In that suit it was adjudged that Henry Van Schaick had an estate as tenant for life in one-half of the said real estate; that among others Sarah Van Schaick, wife of Eugene Van Schaick, had an estate in remainder in the land to commence in possession upon the death of Henry Van Schaick. It being found that the land could not be divided, it was ordered sold. The sale for $134,369.74 is recited. One-half of the proceeds, $67,184.87, was found to belong to Henry Van Schaick for life, at his death to vest in the descendants of Henry Van Schaick as should be then living, or in such persons as should then be the legal owners of said shares. The decree provided that the fund might be paid to Henry Van Schaick upon his giving security to the remaindermen, and provision was made for giving the bond now sued upon. Henry Van Schaick as principal and the American Surety Company then executed the bond in the sum of $75,000. The obligees of the bond were the descendants of Henry Van Schaick living at the time of his death, the amount to be paid to them, their executors, administrators, or assigns. The condition of the bond was that Henry Van Schaick during his lifetime should safely keep and preserve said principal sum, and the same should be paid over to his descendants as provided in the decree. Eugene Van Schaick acquired the interest which had been assigned to his wife. On May 9, 1901, Eugene Van Schaick assigned to the Quarry Company the sum of $20,000, to be paid out of his remainder interest. Henry Van Schaick died on November 15, 1914, leaving Eugene Van Schaick and others surviving him. Eugene Van Schaick died on January 27, 1916. Henry Van Schaick did not keep and preserve the principal of said $67,148.67, the same was not paid as provided in the decree, but was lost by said Henry Van Schaick. The complaint avers demand of the $20,000 and interest, and prays judgment against the defendants.

The action thus appears to have been brought upon the assignment of Eugene Van Schaick, a citizen of New York, to the plaintiff, a corporation of Connecticut, against defendants, who were residents and citizens of New York. Eugene Van Schaick could not have maintained the suit in the federal court, being himself a citizen and resident of New York. This suit was an action at law upon the bond. It was against both the executor and the surety company. The surety company was liable at law only upon the bond. The complaint, fairly considered, shows that such was the real nature of the suit. It contained but a single cause of action, and prayed for joint judgment against the executor of Henry Van Schaick and the surety company. Henry Van Schaick was liable to Eugence Van Schaick upon the bond. Eugene Van Schaick assigned that obligation to the plaintiff to the extent of $20,000. That assignment carried with it the obligation of the surety company given to secure the faithful performance of the duty required of Henry Van Schaick. George v. Tate, 102 U.S. 564, 571, 26 L. Ed. 232.

The defenses, if any, of the surety company against the claim in the hands of Eugene Van Schaick could have been urged against the plaintiff. We think the plaintiff was an assignee within the meaning of section 24, without formal assignment of the bond. Shoecraft v. Bloxham, 124 U.S. 730, 8 Sup. Ct. 686, 31 L. Ed. 574; Plant Investment Co. v. Jacksonville, etc., Ry. Co., 152 U.S. 71, 14 Sup. Ct. 483, 38 L. Ed. 358.

Brown v. Fletcher, 235 U.S. 589, 35 Sup. Ct. 154, 59 L. Ed. 374, is an entirely different suit from the one now under consideration. In that action there was an assignment of an interest in a trust estate by the beneficiary, who was a resident and citizen of New York, to the complainants, who were residents and citizens of Pennsylvania and suit was brought in the District Court of the United States for the Southern District of New York, the defendants being residents and citizens of New York. It was held that the suit to recover this interest in a trust estate was not a suit by an assignee within the meaning of section 24 of the Judicial Code. That suit, this court held, was not a suit upon a chose in action, but was one to recover upon the conveyance of an alienable interest acquired from the owner in a trust estate. Such interests might be sued for in the federal courts when the requisite amount and diversity of citizenship exist. 235 U.S. 598, 599, 35 Sup. Ct. 154, 59 L. Ed. 374. But here the case is different; the suit was upon the bond, the right to recover arising from the assignment of the interest of Eugene Van Schaick in the fund in the hands of Henry Van Schaick. It was not a suit to recover the interest of Eugene Van Schaick in the estate because of the wrongful conversion thereof by Henry Van Schaick. To such a suit the surety company would not be a proper party. It was, as we have stated, an action upon a single cause of action against the executor of the principal and the surety upon the contract evidenced by the bond. The right to such action was derived by assignment from Eugene Van Schaick, a citizen and resident of New York, and as he could not have sued in the federal court, his assignee, the plaintiff, could not, by reason of section 24 of the Judicial Code.

Affirmed.