City of Quincy v. Steel

''Geo. A. Anderson, Jos. N. Carter, and Louis H. Berger'', for appellant.

''Wm. McFadon'', for appellee.

MILLER, J.

This is an appeal from the circuit court of the United States for the Southern district of Illinois. James W. Steel, the complainant in the circuit court, is a citizen of Alabama, and he brings his bill against the city of Quincy, a municipal corporation of the state of Illinois, and the Quincy Gaslight & Coke Company, also a corporation of that state. He sets out a contract between the city of Quincy and the gas company, dated February 14, 1877, the only parts of which in this connection of any importance being that the gas company was to furnish a certain number of lighted lamps for the streets of said city, for which the city agreed to pay a fixed price per annum. This contract was to continue for five years. The city failed to pay the full amount due for gas in any one year, but paid a part of the bill on each year as long as the gas company continued to furnish the gas. On May 11, 1881, the city passed an ordinance declaring that it no longer recognized as binding the agreement between it and the gas company, under which the gas had been furnished, and notifying the company of that fact. The company, however, continued to furnish gas until November, 1883. Instead of a suit by the gas company against the city of Quincy, in an action at law to enforce the rights of the company by a judgment, and by an appropriate writ of mandamus if the city did not pay the judgment, the present suit is brought by Mr. Steel in his own name, on the ground that he is a stockholder in the gas company; and, as the allegations on this branch of the subject on which he relies as his authority to maintain this suit are important, they are given here verbatim from the bill. He says: 'That your orator is advised and believes, and so states the fact to be, that the said company has a just and valid claim against said city of Quincy, and one recoverable in the courts by some suit or suits in the name of said company; that your orator has at different times endeavored to induce the board of directors of said company to institute a suit or suits to recover the said claim against said city; that your orator now is, and for more than four years last past has been, a stockholder in said company; that he now has, and during the entire period last aforesaid has had, seventy-five shares of the capital stock of said company; that said last-named endeavors have been made while your orator was said stockholder; that so far, and up to now, your orator has not succeeded in persuadig said directors to institute suit as aforesaid; that your orator, on August 1, 1885, caused to be addressed to said board a communication in writing, directing and requiring said board to resolve to at once institute suit against said city of Quincy, in the name of said company, in such court or courts as were proper for the recovery of said claim; that said board of directors laid said communication upon the table, as your orator is informed and believes, and therefore so states, and refused to agree to comply with the request therein contained; that whatever claim said company has by reason of the matters and things above alleged will be barred in considerable part before a meeting of the stockholders of said company will occur; that a part of said claim either has been or is about to be barred by the statute of limitations; that further delay in bringing suit will result in a part of said claim being barred by the statute of limitations; and that this suit is brought in good faith, and for the collection of, and to compel the collection of, what your orator believes to be a meritorious claim.' The decree of the court below was rendered on a demurrer to the bill filed by the city of Quincy, which being overruled, the city refused to plead further, and decree was thereupon rendered against it. This decree, made, on the first day of March, 1886, among other things, 'orders, adjudges, and decrees that the said Quincy Gas-light & Coke Company have and recover of said defendant city of Quincy the sum of $36,116.21.' It then makes provision for the enforcement of this decree by certain orders concerning future annual appropriations to be made by the city for payment out of its annual tax levy.

We are of opinion that the demurrer of the city of Quincy should have been sustained, for the reason that Mr. Steel shows no sufficient ground why he should have been permitted as a stockholder of the gas company to sustain this bill. In order to do this the circumstances must be such as to justify the court, in the interest of justice, to override two cardinal principles of federal jurisprudence. One of these is that the litigants in the federal courts, where the right to sustain such litigation depends upon the citizenship of the parties, shall be citizens of different states. In this case the real right of action and the real contest before the court, if it had proceeded, would have been between the two corporations, organized under the laws of Illinois, and existing and doing business in the same place, to-wit, the gas company and the city of Quincy. By sustaining this bill, the gas company recovers a judgment in terms against the city for the amount in controversy under the contract. The other principle which it is necessary to override is that, in the federal courts, the distinction between actions at law and suits in equity has always been kept up. In the present case it is but a plan suit to recover damages on a written contract by the one corporation against the other, on account of a violation of that contract, except as Mr. Steel endeavors to bring himself into the case as having rights which he cannot enforce in a court of law. It is purely and simply a suit to recover money on a written contract in an action in the nature of assumpsit. If, therefore, Mr. Steel, by virtue of being a citizen of Alabama, has any right to prosecute this suit in a court of the United States, and in a court of equity instead of a court of law, it is very obvious that he should make this right plain.

Prior to 1875 cases had come into the courts of the United States, especially into the circuit courts, where citizenship had been simulated, and parties improperly made or joined either as plaintiffs or defendants, for the purpose of creating a case cognizable in the circuit courts originally, or removable thereto from the state courts; and, as it very frequently occurred that both plaintiffs and defendants were willing to seek that court in preference to the state court, it had been found very difficult to prevent these improper cases from being tried in those courts. In the act of March 3, 1875, an attempt was made to correct this evil; and, by the fifth section of that act, it was declared 'that if, in any suit commenced in a circuit court, or removed from a state court to a circuit court of the United States, it shall appear to the satisfaction of said circuit court, at any time after such suit has been brought or removed thereto, that such suit does not really and substantially involve a dispute or controversy properly within the jurisdiction of said circuit court, or that the parties to said suit have been improperly or collusively made or joined, either as plaintiffs or defendants, for the purpose of creating a case cognizable or removable under this act, the said circuit court shall proceed no further therein, but shall dismiss the suit, or remand it to the court from whence it was removed, as justice may require.'