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Cooke v. The State National Bank of Boston.

In December, 1868, after this suit was at issue, the defendant, the State National Bank, applied to the court, at Special Term, upon an affidavit of seven of the directors of the bank, for the removal of the canse into the Circuit Court of the United States for the Southern District of New York. An order was made by Judge CARDOZO transferring the cause to that court, and directing this court to proceed no further in the action, as against the bank, which order was reversed by the General Term on appeal, and on re-argument, the General Term reaffirmed its former decision, on the ground that Mellen, Ward & Carter were not parties to the application.

On the trial, before the case had been opened by the plaintiff's counsel, a protest was made on the part of the bank, that the court had no jurisdiction to hear or try the action, on the ground that it had been removed to and was then pending in the Federal court. And a motion was made to dismiss the complaint for want of jurisdiction on that ground, which was denied. The counsel for the bank also protested that the court had no jurisdiction to hear and try the action, on the ground that under the act of Congress of June, 1864, under which the bank had been created a National bank, it could only be sued in a Circuit or District Court of the United States, held within the State of Massachusetts, or in a court in the county or city in which the bank was located, having jurisdiction in similar cases, and moved to dismiss the complaint for want of jurisdiction, on that ground. This motion was also denied. The defendant's counsel also moved to dismiss the complaint on the ground that there was not sufficient evidence to entitle the plaintiff to go to the jury and also moved the court to direct a verdict for the defendants, both of which motions were denied.

The court directed the jury to find a verdict for the plaintiff for the amount of the check in suit $125,000, with interest, to which direction and decision the defendant's counsel excepted. The jury thereupon found a verdict for the plaintiff for $152,999.88.

E. W. Stoughton, for appellants. After an order is properly made, removing a cause into the Federal court, the State court has no jurisdiction. Act of Congress, March 2, 1867; 14 Stat. at Large, 558; Kanouse v. Martin, 15 How. 198; Gordon v. Longest, 16 Pet. 97; Livermore v. Jenks, 11 How. Pr. 479; Vandervoort v. Palmer, 4 Duer, 677; Ilius v. N. Y. & N. H. R. R. Co., 13 N. Y. 597;

Cooke v. The State National Bank of Boston.

Stevens v. Phænix Ins Co., 41 id. 149; see Bliven v. New England Screw Co., 3 Blatchf. 111; Disbrow v. Driggs, 8 Abb. 306; Jones v. Seward, 26 How. Pr. 436. While the bank was a State bank, Massachusetts was its habitat, and from that a conclusive presumption would arise that its officers and managers were citizens of that State. Rundle v. Del. & Raritan Canal Co., 14 How. 80; Marshall v. Balt. & Ohio R. R. Co., 16 id. 14; Louisville R. R. Co. v. Letson, 2 id. 497; Covington Draw Bridge Co. v. Shepherd, 20 id. 233; Ohio & Mississippi R. R. Co. v. Wheeler, 1 Black, 286. The rule is the same in respect to National banks. Manuf. Nat. Bank v. Baack, 40 How. Pr. 409; 8 Blatchf. 137. The union of parties, without interest, with the real parties to a litigation cannot oust the Federal courts of jurisdiction if the character of the real parties is such as to confer it. Wood v. Davis, 18 How. 467; Wormley v. Wormley, 8 Wheat. 451; Louisville R. R. Co. v. Letson, 2 How. 497; Browne v. Strode, 5 Cr. 303; Livingston v. Gibbons, 4 Johns. Ch. 94; Ward v. Arredondo, 1 Paine's C. C. 410; Norton v. Hayes, 4 Denio, 245; Vandevoort v. Palmer, 4 Duer, 677. Under the act of June 3, 1864, a National bank can be sued only in a Circuit or District Court of the United States, or in a State, county, or municipal court of the State in which the bank is located, having jurisdiction in sim13 Stat. at Large, 99; 12 id. 665, § 59; Bank of U. S v. Deveux, 5 Cr. 85, 86; Osborn v. Bank of U. S., 9 Wheat. 728; Crisp v. Banbury, 8 Bing. 394; Minor v. Mechs. Bank, 1 Pet. 46, 64; Crocker v. Marine Nat. Bank, 101 Mass. 240. The certification of the cashier was void. F. & M. Bank Case, 16 N. Y. 125; N. H. R. R. Case, 34 id. 30; Bank of U. S. v. Dunn, 6 Pet. 51; Fleckner v. U. S. Bank, 8 Wheat. 338; U. S. v. City Bank, 21 How. 356; Mussey v. Eagle Bank, 9 Metc. 306; Fulton Bank v. N. Y. & Sharon Canal Co., 4 Paige, 127; Kirk v. Bell, 12 Eng. Law & Eq. 385; Ang. & Ames on Corp., §§ 299, 300, 301; Story on Agency, §§ 114, 115; 13 Stat. at Large, 19. The rule laid down in N. Y. & N. Haven R. R. Co. v. Schuyler, 34 N. Y. 38, if it be now the law of New York, is not the law of Massachusetts. Mussey v. Beecher, 3 Cush. 511; Lowell Bank v. Winchester, 8 Allen, 109; Benoit v. Conway, 10 id. 528. Nor is it the law of England (Grant v. Norway, 10 C. B. 665; Hubbersty v. Ward, 8 Exch. 330; Alexander v. Mackenzie, 6 C. B. 766; Stagg v. Elliott, 12 C. B. [N. S.] 373; Baines v. Ewing, Law Rep., 1 Exch. 320), or tional courts. Freeman v. Buckingham, 18 How. 182.

ilar cases.

of the Na

The check

Cooke v. The State National Bank of Boston.

was certified to be used as currency; the certificate was void, being without power under the organic law, and as creating a currency prohibited by that law. 12 Stat. at Large, ch. 106, §§ 8, 22, 23, 24, 45; Davidson v. Lanier, 4 Wall. 447; Bank of U. S. v. Owens, 2 Pet. 527; Root v. Godard, 3 McL. 102; Hayden v. Davis, id. 276; Safford v. Wyckoff, 1 Hill, 11; Smith v. Strong, 2 id. 241; Bank of Orleans v. Merrill, id. 295; Leavitt v. Palmer, 3 N. Y. 19; Veazie Bank v. Fenno, 8 Wall. 533. Notice to the Second National Bank

of a want of authority to certify, on the part of the defendant's cashier, was, in law, notice to Jay Cooke & Co. and to the plaintiff. Story's Eq. 408, and note; Toulmin v. Steere, 3 Meriv. 222; Hargreaves v. Rothwell, 1 Keen. 154; Nixon v. Hamilton, 2 Dru. & War. 391; Fuller v. Bennett, 2. Hare, 394; Gerrard v. O'Reilly, 3 Dru. & War. 414; Majoribanks v. Hovenden, Drury, 11; Story on Agency, § 139; Lowther v. Carleton, 2 Atk. 342; 1 Liv. on Agency, ch. 10, § 3; Fulton Bank v. N. Y. & Sharon Canal Co., 4 Paige,

137.

John E. Burrill, for respondent.

CHURCH, Ch. J. The jurisdiction of the State court is denied upon two grounds: 1. That the National Currency Act of Congress prohibited original jurisdiction; and 2. That the cause has been removed from the State to the Federal courts.

The alleged prohibitory statute is the 57th section of the aforesaid act (13 Stat. at Large, 99), and provides: "That suits, actions and proceedings against any association under this act may be had in any circuit, district or territorial courts held within the district in which such association may be established, or in any State, county or municipal court in the county or city in which said association is located, having jurisdiction in similar cases. Provided, however, that all the proceedings to enjoin the Comptroller under this act shall be had in the circuit, district or territorial court of the United States held in the district in which the association is located."

I think the proper construction of this section is to regard the power conferred, of bringing actions against the associations in specified courts, as permissive and not mandatory. The framework of the section implies that intention. The words "may" and "shall" are both used; the former to confer a privilege, the

Cooke v. The State National Bank of Boston.

latter as a mandate. It is presumed that the attention of Congress was drawn to the distinction between the ordinary import of the two words, and that they were used with reference to that distinction, and hence that, if it had been designed to limit prosecutions to the specified courts, the same word would have been employed as in limiting a particular proceeding to a specified court.

There are no words of exclusion in the act, and it is a general rule as to jurisdiction, that to confer it upon one court does not operate to oust other courts before possessing it, for the reason that concurrent jurisdiction is not inconsistent. 2 Hill, 164. This rule would be specially applicable to the 59th section of the act of 1863, of which the section in question is an amendment. By that section, suits by and against these associations were authorized to be brought in the Circuit and District Courts of the United States, without mentioning State courts; and no one, I think, ever supposed that the privilege conferred by that section precluded actions in State courts. There is some force in the argument that the specification of State courts in the act was unnecessary and useless, unless the clause was intended as restrictive; but this is far from conclusive. Words are often used in a statute for the purpose of producing or preventing a particular inference from other words, and sometimes without necessity or pertinency. After authorizing suits in local Federal courts, a similar power in local State courts may have been deemed proper to prevent an inference that jurisdiction was intended to be restricted to the former. At all events, I am unwilling to hold that the jurisdiction of the State courts was intended to be taken away upon doubtful or ambiguous language. Such a construction would enable these associations to delay and defraud their creditors, and produce inconvenience and expense to suitors, involving an amount of injustice which we cannot attribute to the intention of the law-making power. I lay no stress upon the 8th section, because the authority to sue and be sued conferred by that section confers a corporate attribute and does not relate to jurisdiction.

But if this construction of the act is erroneous, I do not think it competent for Congress to deprive the State courts of jurisdiction in all actions against these banking associations. It is proper to observe in the first place that there are no words of exclusion in the Constitution itself. The second section of the third article declares that "the judicial power shall extend to all cases arising under

Cooke v. The State National Bank of Boston

this Constitution, the laws of the United States, and treaties made," etc., and it may well be doubted whether as to such jurisdiction as the State courts before possessed, not relating to subjects growing out of the organization of the government or the specific powers conferred upon it, it was intended to confer by this clause any other than concurrent power. Federalist, No. 82, 2 Hill, supra. However this may be, it is clear that the exercise of the power must be confined to the cases to which the judicial power extends, viz., to cases arising under the Constitution, laws or treaties of the United States, and unless it can be established that every possible action is a case arising under the Constitution or laws of the Union, a general prohibition against actions in State courts would be invalid, and a restriction to particular courts equally so. The case of Osborn v. The Bank of the United States, 9 Wheat. 738, is relied upon as authority for the exercise of this power. That was an action in equity, brought by the bank to restrain the officers of the State of Ohio from collecting a penalty imposed by way of a tax in gross, for its continuing to transact business within the State after a certain period. Upon the theory upon which the bank was created as one of the agencies of the government, that was clearly a case to which the judicial power of the Union extended, and it was competent to authorize such an action to be brought in the United States Circuit Court, and the question of jurisdiction might have been disposed of by restricting the act to such cases.

The opinion of Chief Justice MARSHALL goes to the length, however, of holding that every action which the bank might bring was a case arising under the Constitution and laws of the Union, and this was placed mainly upon the ground that the right to sue depended upon its corporate existence, created by Federal power, and that the possibility that this right might be questioned in any suit constituted a case arising under the Constitution and laws of the United States, without regard to the fact whether any such question was raised or not.

As an original question, I should doubt the soundness of this view, and prefer to adopt the views expressed in the dissenting opinion of JOHNSON, J. But the decision is not decisive of the question as presented in this case. It would be an unwarrantable extension of the principle of that case to apply it to every action against a corporation created by Congress. Whether a corporation.

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