Page:Federal Reporter, 1st Series, Volume 3.djvu/373

 866, PEDEEAL BEPOBTEE. �hy citizens of the same state in which the defendant corpo- ration resides, and from or through whom the plaintiff derived title, deprive the court of jurisdiction? The answer of the question involves the construction of the first section of the act of March 3, 1875, (18 St. 470,) which enacts that "no circuit or district court shall have cognizance of any suit founded on contract, in favor of an assignee, unlcss a suit might have been prosecuted in such court to recover thereon if no assignraent has been made, except in cases of promis- Bory notes, negotiable by the law merchant, and bills of ex- change," �It will be perceived, on examination, that this is a re-en- actment of the eleventh section of the judiciary act, with a change of phraseology as to the subject-matter of the suit. The latter specifies a "suit to recover the contents of any promissory note, or other choses in action," while the recent enactment embraces "any suit founded on a contract," and excepta "promissory notes and bills of exchange." The ob- ject of both is the same — to prevent persons assigning con- tracts to nominal parties, residing in other states, merely to clothe the court with jurisdiction from the residence of the litigants. This replication is put in to claim for the plaintiff the benefit of the well-known doctrine that a purchaser with notice may inyoke in his behalf the want of notice of a prior innocent holder. The defendants, by demurring thereto, con- fesB the truth of its allegations, and acknowledge that the plaintiff is a bona fide holder of the bonds, without notice of the alleged defects in their inception. City of Lexington v. Butler, U Wall. 282, 295. �It is conceded that such municipal bonds are contracta, but they are not the contracta that are contemplated by the sec- tion of the statute under consideration, It is not a contract which the maker of the bonds enters into with the original holder, who tranfers his right of action, by assignment, to a subsequent holder, but one made with every holder of a bond who has the right of action by reason of his honafide posses- sion. Such bonds have aU the qualities of pegotiable paper, ����