Chicago, Rock Island & Pacific Railroad Company v. Stude/Opinion of the Court

The petitioner, a Delaware corporation, owns and operates its railroad through Pottawattamie County, Iowa. It was authorized by the Interstate Commerce Commission to improve its line of railway in that county and by the Iowa State Commerce Commission to acquire by condemnation any land necessary for the improvement.

On January 18, 1952, pursuant to the Iowa Code, the petitioner filed with the sheriff of the county its application to condemn certain lands in the county owned by respondent Stude. The sheriff appointed a commission of six resident freeholders to assess damages. Notice was given by the sheriff to the respondent owner and others interested in the land, and an award of damages in the sum of $23,888.60 was allowed to the owner and $1,000 to the tenant. The amount of the assessment was paid by the petitioner to the sheriff and the petitioner took possession of the land. Such appraisal became final unless appealed from.

On March 6, 1952, the petitioner filed with the sheriff of the county a notice of appeal from the commission's award. The Iowa Code provides for appeal as follows:

'472.18 Appeal. Any party interested may, within thirty days     after the assessment is made, appeal therefrom to the      district court, by giving the adverse party, his agent or      attorney, and the sheriff, written notice that such appeal      has been taken.

'472.21 Appeals-how docketed and tried. The appeal shall be     docketed in the name of the owner of the land, or of the      party otherwise interested and appealing, as plaintiff, and      in the name of the applicant for condemnation as defendant,      and be tried as in an action by ordinary proceedings.' Code      of Iowa 1950, I.C.A.

The petitioner then filed a complaint in the United States District Court for the Southern District of Iowa against the respondents in which it alleged diversity of citizenship, jurisdictional amount, authority to make improvements and to condemn therefor, together with a description of the land and that respondent Stude was the owner, and that the assessment proceedings had been instituted in the sheriff's office, resulting in the assessment of damages of $23,888.60, which was alleged to be excessive, and that appeal was taken by notice duly given. This notice was referred to as Exhibit A to the complaint, which exhibit recited that the appeal was taken to the Federal District Court for the Southern District of Iowa, and a transcript of the sheriff's proceeding was filed in that court. The prayer was that the damages for the taking of the land be fixed at not more than $10,000. On this complaint, a summons was issued and served upon the respondents.

The petitioner also filed an appeal from this assessment in the state court, the District Court for Pottawattamie County. The case was docketed there with the landowner as the plaintiff and the petitioner-condemnor as defendant, as required by the Iowa Code. Thereafter, a petition to remove the cause to the federal court was filed by the petitioner. The respondents filed in the Federal District Court a motion to dismiss the complaint filed therein and a motion to remand the case removed from the state court.

The federal court granted the motion to dismiss and dismissed the complaint but denied the motion to remand. Chicago, R.I. & P.R. Co. v. Kay, D.C., 107 F.Supp. 895. The petitioner appealed from the judgment dismissing its complaint. The respondents gave notice of appeal from the order of the District Court denying the motion to remand. The Court of Appeals affirmed the District Court's judgment dismissing the complaint and reversed the District Court's denial of the motion to remand, and ordered the cause remanded to the state court. 204 F.2d 116; 204 F.2d 954. We granted certiorari, 346 U.S. 810, 74 S.Ct. 46.

The Order Denying the Motion to Remand. Obviously, such an order is not final and appealable if standing alone. Reed v. Lehman, 2 Cir., 91 F.2d 919; Miller v. Pyrites Co., 4 Cir., 71 F.2d 804. While these two cases were separate actions pending on the docket of the Federal District Court, they both involve the same subject and they were treated by the parties, the District Court and the Court of Appeals as if the dismissal appealed from and the order in the removal case were made in one case. Treating them as one case, the cross-error, challenging the order denying the motion to remand, may be considered as assigned in a case involving an appealable order, the order dismissing the complaint and the action. This is true despite the fact that the order denying the motion to remand standing alone would not be appealable. Deckert v. Independent Shares Corp., 311 U.S. 282, 287, 61 S.Ct. 229, 232, 85 L.Ed. 189.

We come therefore to the merits of the motion to remand. The question on this motion is whether the petitioner was a defendant nonresident of Iowa and therefore authorized to remove to the Federal District Court as provided by statute, 28 U.S.C. § 1441(a), 28 U.S.C.A. § 1441(a).

The proceeding before the sheriff is administrative until the appeal has been taken to the district court of the county. Then the proceeding becomes a civil action pending before 'those exercising judicial functions' for the purpose of reviewing the question of damages. Myers v. Chicago & N.W.R. Co., 118 Iowa 312, 315-316, 91 N.W. 1076, 1078. When the proceeding has reached the stage of a perfected appeal and the jurisdiction of the state district court is invoked, it then becomes in its nature a civil action and subject to removal by the defendant to the United States District Court. Mississippi & Rum River Boom Co. v. Patterson, 98 U.S. 403, 407, 25 L.Ed. 206.

Is the petitioner such a defendant? The petitioner contends it is because the Code of Iowa, § 472.21, I.C.A., provides that on appeal, the case shall be docketed in the district court with the landowner as the plaintiff and the condemnor as the defendant and thereafter tried as in an original proceeding. The Supreme Court of Iowa has construed this statute to mean that in such proceedings on appeal, the condemnor is the defendant. Myers v. Chicago & N.W.R. Co., supra, 118 Iowa at page 324, 91 N.W. at page 1081. This Court was urged in Mason City and Fort Dodge Railroad Company v. Boynton, 204 U.S. 570, 27 S.Ct. 321, 51 L.Ed. 629, to follow that construction put upon this identical provision of the Iowa statute by the Supreme Court of Iowa. This Court declined to do so, saying:

'It is said that this court is bound by the construction     given to the state law by the state court. Indeed, the above     § 2009 does not need construction; it enacts, in terms, that      the landowner shall be plaintiff. As the right to remove a     suit is given only to the defendants therein, being      nonresidents of the state, it is argued that the state      decision ends the case.

'But this court must construe the act of Congress regarding     removal. And it is obvious that the word 'defendant' as there     used is directed toward more important matters than the      burden of proof or the right to open and close. It is quite     conceivable that a state enactment might reverse the names      which, for the purposes of removal, this court might think      the proper ones to be applied. In condemnation proceedings     the words 'plaintiff' and 'defendant' can be used only in an uncommon and liberal sense. The plaintiff complains of     nothing. The defendant denies no past or threatened wrong. Both parties are actors: one to acquire title, the other to     get as large pay as he can. It is not necessary, in order to     decide that the present removal was right, to say that the      state decision was wrong. We leave the latter question where     we find it. * *  *

' * *  * Therefore, in a broad sense, the railroad is the      plaintiff, as the institution and continuance of the      proceedings depend upon its will. * *  * ' 204 U.S. 570, at      pages 579-580, 27 S.Ct. at page 323.

For the purpose of removal, the federal law determines who is plaintiff and who is defendant. It is a question of the construction of the federal statute on removal, and not the state statute. The latter's procedural provisions cannot control the privilege or removal granted by the federal statute. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 104, 61 S.Ct. 868, 870, 85 L.Ed. 1214. Here the railroad is the plaintiff under 28 U.S.C. § 1441(a), 28 U.S.C.A. § 1441(a), and cannot remove. The remand was proper.

The Motion to Dismiss. We think it was properly granted, and the original complaint in the Federal District Court correctly dismissed. The steps taken by the petitioner were those to perfect an appeal to the Federal District Court. The notice said it was the intention of the petitioner to docket the appeal in the federal court. The transcript on appeal was filed in the federal court, and the complaint filed sought a review of the commission's assessment of damages. The proceeding makes no sense on any other basis, for the action is brought not by the person injured, namely, the landowner, but by the railroad that inflicted the damage. It will be noticed further that there is no prayer for damages but only for a review of the assessment, in keeping with the Iowa Code, § 472.23, I.C.A., which provides 'no judgment shall be rendered except for costs * *  * .' In short, it was an attempt of the petitioner to review the state proceedings on appeal to the Federal District Court.

The petitioner, after giving notice of appeal by filing notice with the sheriff, etc., could not perfect that appeal to any court but the court which the statute of Iowa directed, which was the District Court of that State for the County of Pottawattamie. The United States District Court for the Southern District of Iowa does not sit to review on appeal action taken administratively or judicially in a state proceeding. A state 'legislature may not make a federal district court, a court of original jurisdiction, into an appellate tribunal or otherwise expand its jurisdiction * *  * .' Burford v. Sun Oil Co., 319 U.S. 315, 317, 63 S.Ct. 1098, 1099, 87 L.Ed. 1424. The Iowa Code does not purport to authorize such an appeal, Congress has provided none by statute, and the Federal Rules of Civil Procedure, 28 U.S.C.A., make no such provision.

We cannot ignore this plain attempt to appeal and treat the complaint as initiating an original action, as if the parties had agreed that the petitioner could take the land, leaving only a controversy as to the amount of compensation. In that instance, there would be an implied agreement that the petitioner would pay the landowner the fair value of the land. Either party might in that posture of the case ask for a declaration as to the amount of compensation owing. The claim for damages would arise in that case from the substantive rights given by the implied contract, and the suit would be one to enforce that contract. We have no such case here. The right to take the land and the ensuing right to damages here spring from the exercise of the power of eminent domain. The petitioner here seems to ignore the means by which it obtained the land and seeks to review only the question of damages. It may not separate the question of damages and try it apart from the substantive right from which the claim for damages arose. Nor can it be said that petitioner has fully exercised its power of eminent domain, leaving nothing to be determined but the question of damages. Petitioner has possession but not title to the land. The land does not belong to the petitioner until the damages are paid. The sheriff, or the clerk of the state district court in case of appeal, must file in the county recorder's office all the papers filed in the proceeding. Code of Iowa 1950, §§ 472.35, 472.36, I.C.A. The Iowa Code, § 472.41, I.C.A., makes this record presumptive evidence of title in the condemnor. Petitioner is still in the process of trying to get the land by virtue of its power of eminent domain. But obviously the complaint here was not filed to invoke the jurisdiction of the federal court in an eminent domain proceeding.

The Federal Rules of Civil Procedure do have elaborate provisions for procedure in the federal court in condemnation proceedings. It is obvious that the petitioner was not proceeding under these Rules. Whether it could so proceed as an original action in the United States District Court for the Southern District of Iowa is not before us.

The judgment is affirmed.

Affirmed.