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the want of the seals of the commissioners from being set up to defeat an action at law upon the bonds or coupons. The mere fact that the purchasers, at the time of their purchase, did not observe the omission of seals upon securities having in all other respects the appearance of municipal bonds, is not such negligence as should present them from applying to a court of equity to correct a mistake of this character. See Wadsworth v. Wendell and Montville v. Haughton, supra; Harris v. Pepperell, L. R. 5 Eq. 1; Elliott v. Sackett, 108 U.S. —; (S. C. 2 Sup. Ct. REP. 375.]

The objection that the statute did not authorize the bonds to be issued with coupons, if it is of any validity, (which we do not intimate,) will be fully open to the defendant in the actions at law upon the coupons.

The suggestion that the consent of the tax-payers to the issue of the bonds was obtained by fraud is not supported by the evidence. The consent of a majority of all the tax-payers of the township has been held necessary by the court of chancery and by the supreme court of New Jersey. The chancellor, in granting an injunction against the issue of bonds without such consent, expressed the opinion that the want of such consent would afford no defense at law after the bonds had been once issued, and had come into the hands of innocent holders for value. The supreme court decided otherwise. Lane v. Schomp, 5 C. E. Green, 82; Morrison v. Bernards, 7 Vroom, 219. The question has not, so far as we are informed, been passed upon by the court of errors.

The exchange of the bonds directly for railroad stock would seem, in the absence of any decision in the courts of the state upon the point, to be a substantial compliance with the statute, or, at the most, a matter which would not defeat the rights of a bona fide purchaser. See Scipio v. Wright, 101 U. S. 665; Montclair v. Ramsdell, 107 U. 'S. 147, 160; [S. C. 2 Sup. Ct. REP. 391.) . But if either the want of a written consent of a majority of all the tax-payers, or the fact that the bonds were issued directly in exchange for stock, is a fatal objection as against a purchaser for value and in good faith, it may be availed of by the township in the actions at law on the coupons. If these objections are not of that character, they do not impair the equity of the purchasers to relief against the accidental omission of the seals of the commissioners. The validity of both these objections, therefore, may be more appropriately determined in the actions at law.

The remaining question argued at the bar is how far the citizenship of the real parties in interest, and the amount of the claim of each, should affect the exercise of jurisdiction, and the extent of the decree. The position of the plaintiffs is that the bonds and coupons being payable to bearer, they are entitled to sue, at law or in equity, on all the coupons held by them; that the combination of the holders of several claims of moderate amount against the same defendant for the purpose of diminishing and sharing the expense of litigation, was entirely proper, and should be encouraged by the court ; that the bonds and coupons owned as well as held by the plaintiffs, and by others not citizens of New Jersey, clearly brought the case within the jurisdiction of the court; and that to deny to citizens of New Jersey the right to transfer their claims to the plaintiffs for the purpose of collection in the same suit would be to discriminate unjustly between the citizens of New Jersey and the citizens of other states. But, in the matter of the jurisdiction of the federal courts, the discrimination between suits between citizens of the same state and suits between citizens of different states is established by the constitution and laws of the United States. And it has been the constant effort of congress and of this court to prevent this discrimination from being evaded by bringing into the federal courts controversies between citizens of the same state.

In the judiciary act of 1789, the only express provision to this enda was that the circuit court should not “have cognizance of any suit to* recover the contents of any promissory note or other chose in action in favor of an assignee, unless a suit might have been prosecuted in such court to recover the said contents if no assignment had been made, except in cases of foreign bills of exchange." St. Sept. 24, 1789, C. 20, § 11; 1 St. 78; Rev. St. § 629, cl. 1. That provision has been held not to be restricted to actions at law, but to include bills in equity to foreclose mortgages, or to compel the specific performance or enforce the stipulations of contracts. Sheldon v. Sill, 8 How. 441; Corbin v. Black Hawk Co. 105 U. S. 659.

In Barney v. Baltimore, 6 Wall. 280, a bill in equity for the partition of real estate and for an account of rents and profits, in the circuit court of the United States for the district of Maryland, by a citizen of Delaware, owning a share in the estate, against citizens of Maryland, owning other shares therein, and to whom the owners of the remaining shares, being citizens of the District of Columbia, and not of any state, and therefore not authorized to sue in the circuit court of the United States, had conveyed their shares without consideration, under an agreement to reconvey upon request, and for the sole purpose of giving jurisdiction to the federal courts, was dismissed, because the grantors were necessary parties to the suit, and because their conveyance, not transferring their real interests to the other parties, was a fraud upon the court.

The act of March 3, 1875, c. 137, § 5, directs that if, “in any suit commenced in a circuit court," it shall appear to the satisfaction of the court, “at any time after such suit has been brought,” “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” by the circuit court, that court “shall proceed no further

therein, but shall dismiss the suit," and shall make such order as to costs as shall be just, and its order of dismissal shall be reviewable in this court on writ of error or appeal. 18 St. pt. 3, p. 470.

•In Williams v. Nottawa, 104 U. S. 209, decided by this court since the hearing of these cases in the circuit court, an action was brought by Williams, a citizen of Indiana, in the circuit court of the United States for the western district of Michigan, against a township in that state and district, upon its bonds payable to bearer. The action, as the record on file shows, was brought in September, 1874, about six months before the passage of the act of 1875. It appeared that Williams personally owned only three of the bonds, of $100 each, and that the other bonds in suit had been transferred to him solely for the purpose of collection with his own, by the owners thereof, all of whom were citizens of Michigan, except one Tobey, whose bonds amounted to $300 only, and whose citizenship was not disclosed by the record. The circuit court gave judgment for the plaintiff for the amount of the bonds belonging to Williams and to Tobey, and in favor of the township for the remainder. Upon a writ of error sued out by Williams to reverse the judgment in favor of the township, this court held that, in obedience to the act of 1875, the action should be wholly dismissed; because, so far as concerned the bonds owned by citizens of Michigan, who could not sue a Michigan township in the courts of the United States, it could not be doubted that the transfer to the plaintiff, being colorable only, and never intended to change the ownership, was made for the purpose of “creating a cause cog. nizable in the courts of the United States ;" and, as to the bonds owned by Williams and by Tobey, there was a collusive joinder, because, when the suit was begun, the amount due to each was less than $500, and therefore insufficient to maintain a suit in the federal courts.

The decision in Williams V. Nottawa establishes that the circuit court of the United States cannot, since the act of 1875, entertain a suit upon municipal bonds payable to bearer, the real owners of which have transferred them to the plaintiffs of record for the sole purpose of suing thereon in the courts of the United States for the benefit of such owners, who could not have sued there in their own names, either by reason of their being citizens of the same state as the defendant, or by reason of the insufficient value of their claims. The principle of thatodecision is equally applicable to suits in equity to assert equitable rights under such bonds.

It was argued that these bills in equity were only auxiliary to the actions at law, which were brought before the passage of the act of 1875, and therefore that act had no application. The answer to this is twofold: First. The bills in equity, filed since the passage of the act, are independent suits, of broader aim than the actions at law. The actions at law are to recover the amount of coupons only; the bills in equity seek not merely an injunction against setting up the defense of want of seals in the pending actions on the coupons, but also a decree declaring that the bonds shall be deemed valid. Second. Even the actions at law, brought before the passage of the act of 1875, are subject, under the adjudication in Williams v. Nottawa, to be dismissed in whole or in part, as the facts may require, in the court in which they are pending.

It follows that these bills should have been dismissed so far as regarded the bond for $200 owned by a citizen of New York in the first case, and also as to all the bonds owned by citizens of New Jersey in either case.

But no valid objection has been shown to the maintenance of these bills so far as regards those bonds of which the plaintiffs are the bearere, and which are actually owned either by them. selves, or by other citizens of New York or Pennsylvania, to a sufficient amount by each owner to sustain the jurisdiction of the circuit court. Thompson v. Perrine, 106 U.S. 589; [S. C. 1 SUP. CT. REP. 564, 568;] Chickaming v. Carpenter, 106 U. S. 663; [S. C. 1 Sup. Cr. REP. 620;} Douglas Commissioners v. Bolles, 94 U. 8. 104, 109; Cromwell v. Sac Co. Id. 351, 360. The decrees of the circuit court must be modified accordingly.

The decrees in favor of the appellees being reversed as to a large part of their claims, they should pay costs in this court; but as they still maintain their bills as to the rest of their claims, they should recover costs in the court below.

The decrees of the circuit court are reversed, and the cases remanded, with directions to enter decrees in conformity with this opinion.

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Mr. Justice FIELD took no part in this decision.

(109 U. S. 371)

FLASH and others v. Conn.

(November 26, 1883.)




The liability of stockholders under a statute providing that “All the stockholders Where the highest court of the state by which such statute was passed has con

of every company incorporated under this act shall be severally individually liable to the creditors of the company in which they are stockholders, to an amount equal to the amount of stock held by them, respectively, for all debts and contracts made by such company, until the whole amount of capital stock fixed and limited by such company shall have been paid in and a certificate thereof shall have been made and recorded as prescribed in the following section," is not in the nature of a penalty, but a liability arising upon a contract, and may be enforced by action against a stockholder in any court sitting beyond the limits of the state by which the law was passed that has jurisdiction of the subject-matter and the parties.

strued it, such construction will generally be adopted by the federal courts; and it is no objection to such construction that it was made after the parties proceeded against became stockholders, or that the action was instituted in

another state. Where a statute makes every stockholder individually liable for the debts of the

company for an amount equal to the amount of his stock, the liability is fixed, and there is no necessity for resort to a court of equity to ascertain the extent of the liability; and any creditor who has recovered judgment against the company, and sued out an execution thereon which has been returned unsatisfied, may sue any stockholder in an action at law.

In Error to the Circuit Court of the United States for the Northern District of Florida.

The plaintiffs in error, who were the plaintiffs below, brought this suit in the circuit court of Escambia county, in the state of Florida, on January 27, 1876. It was afterwards, on the petition of defend

ant, removed to the circuit court of the United States for the north. ern district of Florida. The declaration alleged that the defendant, on or before April 1, 1874, was a stockholder in the Pensacola Lumber Company, a corporation organized in the state of New York under the provisions of an act of the legislature of that state, passed February 17, 1848, entitled “An act to authorize the formation of corporations for manufacturing, mining, etc., purposes," and various amendments thereof; that the defendant was the holder of $75,000 of the stock of said company, the entire stock being $300,000; that the company carried on business, and had an office and an agent, in said county of Escambia, state of Florida; that the company, while the defendant was the holder of the stock aforesaid, became largely indebted to the plaintiffs, which indebtedness was evidenced by two promissory notes, one for $5,000, dated September 11, 1864, and one for $5,946.20, of like date, and an account stated for $2,646.47; that the plaintiffs, on February 16, 1875, instituted their suit in the circuit court of said Escambia county against the said company to recover the amount due on said notes and account, and on March 15, 1875, judgment was rendered by said court in favor of plaintiffs, for the sum of $14,120.50 and costs; that the company having been adjudged bankrupt by the United States district court for the southern district of New York in the year 1875, its property could not be taken in execution to satisfy said judgment, nevertheless an execution was issued thereon and returned wholly unsatisfied; that the property of the company had been sold by order of the bankrupt court, and its proceeds would not more than pay the costs of the bankrupt proceedings, leaving nothing to be applied to the payment of said judg. ment or claims of other creditors against the company; that by the provisions of the act under which the company was organized, all the stockholders were severally individually liable to the creditors of the company to an amount equal to the amount of stock held by them respectively for all debts and contracts made by such company until the whole amount of capital stock fixed and limited by such company

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