North American Loan & Trust Co. v. Colonial & U. S. Mortg. Co.

54 N.W. 659, 3 S.D. 590, 1893 S.D. LEXIS 24

Opinions

Kellam, J.

In May, 1892, respondent commenced an action against appellant in the circuit court in Hand county, by the serv-. ice of- summons and verified complaint, for the recovery of money, alleged to be due upon contract. Before the expiration. of the time within which appellant, was by law required to answer, it caused to be filed in the office of the clerk of said’ court, its petition for the removal of the cause to the federal court, setting forth such facts as to the diverse citizenship of the parties and the amount in controversy as it is not questioned would, with the. filing of the required bon'd, entitle appellant to a removal, if such filing in the clerk’s office constituted appellants whole duty.under section 3 of the act of congress of March 3, 1887. We. state the conditions thus generally because the particular question discussed by counsel, and the question which we propose to examine, is, what is the effect upon the authority of a state court to proceed in a case of the filing in the office of the cierk of such state court, as a part of the records of the case, of a petition and bond, as provided by said section 3 of the federal law? The section provides “that, whenever any party desires to remove any suit capable of being removed, he may make and file a petition in such suit in such state court at the time, or any time before the defendant is required by the laws' of the state or the rule of the state court in which such suit is brought to answer or plead to the declaration or complaint of the plaintiff, for the removal of such suit into the circuit court to be held in the district where such suit is pending, and shall make and file therewith a bond, with good and sufficient surety, for his or their entering in such circuit court, on the first day of its then next session, a copy of the record in such suit, and for paying all costs that may be awarded by said circuit court, if said court shall hold that such suit was wrongfully or improperly removed thereto. It shall then be the duty of the state court to accept such petition and bond, and proceed no further in such suit.” The federal courts are the final judges as to the construction and meaning of this, law, and to. their adjudications we naturally look for a decisive and controlling interpretation. Except as to the amount in controversy and the time prescribed for filing the petition and bond, the provisions of this law have been in force for 100 years, and it is remarkable that there should still be doubt as to what it means. Appellant cites many cases from the United States supreme court, like Steamship Co. v. Tugman, 106 U. S. 118, 1 Sup. Ct. Rep. 58, which definitely declare the effect of filing the petition and bond upon the authority and jurisdiction of the state court; but, although appellant strenuously contends otherwise, we think none of them necessarily control this case, because none of them undertake to define what is meant, by the expression “and file a petition in such suit in such state court,” and in none of the cited cases does this precise question appear to have been mooted.

Respondent contends that the filing of a petition and bond, sufficient upon their face, in the office of the clerk of the state court in which the action sought to be removed is pending, is not such a filing “in such state court” as is required by the law under consideration; that filing in the court includes presenting to the court; and that such filing in the clerk’s office without presentation to the court itself, by the petitioner, is insufficient to arrest the farther progress of the case in the state court. A number of cases are cited to sustain this contention. In Shedd v. Fuller, 36 Fed. Rep. 609, strongly relied upon as a clear and positive assertion of this doctrine, Gresham, J., delivering an oral opinion, gives the following as the facts upon which the case was decided: “The counsel for one of the defendants in this suit presented to the clerk of the state court in which the suit was pending a petition and bond in the usual form for its removal to this court, and, upon the request of the counsel, he was furnished by the clerk with an authenticated copy of the record which was filed in this court.” Whether in the least significant or not, we have no means of knowing, but it is noticeable that it does not appear that the petition and bond were ever filed, or became a part of the records in the case. They were simply presented to the clerk, who, upon request of counsel, furnished a copy of the record. The opinion is a very short one, but maintains through out the distinction between presenting to the clerk and presenting to the court. It certainly does not expressly decide that filing a petition asking the court for a removal; and making it a part of the records of the case, is not presenting such petition to the court. The statement of facts leaves us in doubt whether the doctrine of the opinion is that filing in the clerk’s office in open court, with the other records in the suit, is not filing “in the court,” within the meaning of the section, or whether the necessity for presenting to the court arises from the subsequent provision of the section which makes it the duty of the court to “accept” the petition and bond, and proceed no further in the case. The opinion says: “The presentation of a proper petition and bond to the state court for its action is a jurisdictional prerequisite;” and cites Stone v. South Carolina, 117 U. S. 430, 6 Sup. Ct. Rep. 799, where it is said: “As the right of removal is statutory, before a party can avail himself of it he must show upon the record that his is a case which comes within the provision of the statute ;” and “his petition for removal, when filed, becomes a part of the record in the cause.” These propositions, put together, would seem to suggest the conclusion that a party who files in a suit a sufficient petition and bond does show upon the record that his is a case entitled to removal. But, evidently construing Judge Gresham’s opinion to mean that, in addition to filing the petition and bond, and thus making them a part of the records in the case, it was necessary to expressly call the attention of the court to the same, Judge Nelson, in Roberts v. Railroad Co., 45 Fed. Rep. 433; where the petition was filed with the clerk, says, without argument or further comment, such opinion indicates the correct practice in such cases. In Williams v. Association, 47 Fed. Rep. 533; the petition and bond were presented to the judge of the state court, court not being then in session, and filed in the clerk’s office. The court asks: “Is it sufficient to present the petition and bond, when no court is in session, to a judge of the state court, sitting in his office, and subsequently to file them in the office of the clerk?” and answers, “Manifestly not. It is the state court which is authorized to act upon the petition, and not a judge or a clerk of the state court;” and cites the cases above noticed. In Hall v. Agricultural Works, 48 Fed. Rep. 599, a petition and bond had been prepared and filed, but not presented to the court, for the reason that there had been no session of the court. The case was remanded to the state court, the federal court saying: “The cause is not removed until the petition and bond shall be presented to the state court for acceptance.” There may be other cases equally clear and explicit, but these are representative, and are sufficient to show that respondent’s position is well supported. Notwithstanding these decisions, however, and the very eminent learning and ability of the judges who pronounced them, a majority of this court entertain grave doubt of their correctness. We believe the statute itself is a general recognition of the justness of the principle that in important cases, involving large pecuniary interests, a citizen of a foreign state or country ought not to be compelled to submit the determination of his rights to a forum in which he is a stranger and his adversary is at home. We think the primary object of the law was to confer a substantial benefit upon a foreign defendant by allowing him to remove such a case from the state to the federal court, and it seems to us that the law was carefully framed with a view of making the right conferred always available. It must have been known to the congress which passed the original removal act, and to subsequent ones which have amended it, that courts are in session only at stated times; that generally, when not so in session, there is no court. It was and is commonly known that the time within which a defendant is required to plead is fixed sometimes by law and sometimes by rule of court, and that it might and would often occur that the tune within which the defendant must plead would expire before there would be an open court to which a petition for removal and bond could be presented. In such case we see no way, within the terms of the law, by which a foreign defendant could save or make effective his right of removal. Certainly the law does not expressly require any formal application to the court, and we cannot persuade ourselves that it was intended to recognize and declare the general right of removal, but to make such right available only upon the uncertain contingency of an opportune term of court. The law, in terms, imposes but one duty upon a defendant seeking removal, and that is to “make and file a petition in snch suit, in such state court, at the time or any time before the defendant is required by the laws of the state, or the rule of the state court in which such suit is brought, to answer or plead,” and to make and file therewith a bond, etc. If the law stopped here, we doubt if it would ever occur to anybody that more was required of the defendant than that he should, in proper time, file such petition and bond in the same manner as other papers are filed in the same court, to wit, in the office where the court’s records are by law kept, and with the officer who is by law the custodian of such records; but, this being done, the next duty is by the law specifically put upon the court “to accept such petition and bond, and proceed no further in such suit.” There is nothing in the law expressly requiring the defendant to do any act or thing, except to file “in the state court” his petition and bond.

It is argued, however, that, 'even if presentation to the court is not fairly included in, and a necessary part of, the filing in such court, yet the duty of the'court to “accept” could only follow a presentation, for it would be indispensable that the court be judicially informed of such petition before it could accept it, but the doctrine is very old that in any case the court has judicial knowledge of all matters properly of record in such case, (12 Amer. & Eng. Enc. Law, p. 183, and cases cited), and “his petition for removal, when filed, becomes a part of the record in the cause,” and the court is thus judicially informed that its power over the cause has been suspended, (Insurance Co. v. Pechner, 95 U. S. 185.) “For the purpose of the transfer of a case, the petition for removal which' the statute requires performs the office of a pleading,” (Water Co. v. Keyes, U. S. 199,) so .that thereafter the court would judicially know of the petition and bond, and their contents, as much as it would judicially know the allegations of a pleading pi’operly filed in the case. It is no doubt' an orderly, respectful, and desirable practice to present the petition and bond to the court, if it be in session, and thus actively call the same to its immediate attention, but its action is only formal and perfunctory, it is not the decision of the court that determines its jurisdiction, but the filing of a sufficient petition and bond. Concerning the change of jurisdiction from the state to the federal court, Judge Dillon, in his work on Removal of Causes, (section 143,) says: ‘(In this respect there seems to be a misapprehension in the minds of several of the courts, as evidenced in the use of the words ‘surrender its jurisdiction.’ This implies a deliberate exercise of volition on the part of the state court, whereas in reality its jurisdiction (and therefore its choice in the matter) is instantly terminated by the mere fact of filing of papers which disclose a removable cause, and which comply with the statutory requirements. If, therefore, this state of facts does in reality exist, (in advance of a judicial determination of it,) the state court no longer has even so much jurisdiction as will 'enable it to inquire into the sufficiency of the application.” Even in the Shedd Case, supra, Judge Gresham says: “The right of removal does not depend upon the action or nonaction of the state court,” and yet he refused to take jurisdiction because, the state court had not acted. It has been repeatedly held that if the petitioner complies with the requirements of the statute, and states in his petition facts which, if true, show, in connection with the record of the case, that he is 'entitled to a removal, the jurisdiction of the state court is thereby arrested, even though that court refuse to recognize the right of removal. Railway Co. v. Dunn, 122 U. S. 513, 7 Sup. Ct. Rep. 1262; Marshall v. Holmes, 141 U. S. 589, 12 Sup. Ct. Rep. 62, and cases cited. The defeat of the defendant’s right of removal, by reason of there being no timely term of court, might be avoided by holding, as was held by the Texas supreme court in Railway Co. v. Bloom, 20 S. W. Rep. 133, and by federal courts in Burck v. Taylor, 39 Fed. Rep. 584, and State v. Coosaw Min. Co., 45 Fed. Rep. 804, that the petition and bond being filed in time, the presentation to the court might be subsequently made. Whether this is in harmony with the theory of the law of removal we do not undertake to say. It cannot, however, rest upon the theory that formally presenting to the court is included the “filing” —to wit, the acts constituting the filing — would not be done within the time prescribed. Whatever is included in in the “filing in the court” required by the law; for in such case the “filing in the state court” must, by the terms of the law, be done within the time limited; but if, upon any theory, such practice is allowable, we do not see why it might not be applied to this case, and thus save the defendant’s right to remove. Here the defendant, within the proper time, to wit, May 27, 1892, filed his petition and bond with the legal custodian of all the court’s records, to wit, the clerk of said court, and on the 28th day of June following, there having been no intervening term of court, clearly brought his petition for removal to the attention of the court, in a motion to set aside the judgment for the reason that such petition and bond had been filed. It ought not to affect defendant’s right to a removal that the judgment had been entered in the mean time, for that was done without his knowledge, and could not have been controlled by him. Neither ought the plaintiff, so far as the question of removal is concerned, to gain any advantage from such judgment, for he took it after full knowledge, not only constructive, but actual, that the petition and bond had been filed. It cannot affect the proper construction of the federal law that, by a peculiarity of our local statute, the circuit courts of the state are always open for the transaction of certain kinds of business. If this fact has any bearing at all upon this individual case, it would, we think, work to the advantage of appellant; for then its petition and bond were, in theory at least, filed with the clerk in open court, on the 27th day of May, and were actually presented to the court on the 28th day of June. The filing in time justified the subsequent presentation to the court, so the Texas case, supra, says. In harmony with the Texas case, and opposed to Williams v. Association, supra, is State v. Coosaw Min. Co., supra. There the petition and bonds were filed with the clerk during vacation, and exhibited to the judge personally March 31st, but it does not appear that he took any action whatever. There would be no session of his court until May following. The record having in the mean time gone to the federal court, it was there objected that the cause had not been removed. The court held that, “this being a removable cause, as soon as the petition and bond were filed in the^state court its jurisdiction absolutely ceased, and that of this court im mediately attached;” but that although the jurisdiction was changed, and the case transferred, courtesy to the state court might justify the federal court in withholding affirmative action in the case until the papers could be formally presented to such state court, but that, as the judge of that court had been informed concerning them, “no discourtesy to the state court can now be supposed.” It is also difficult to harmonize these views with the proposition of Judge Gresham in the Shedd Case, that “the presentation of a proper petition and bond to the state court for its action is a jurisdictional prerequisite,” if by “presentation” is meant the actual and express offering of the same to the court in open session.

It is suggested that, if there is no court in session, a defendant may save his right of removal by procuring an extension of time for pleading, it having been sometimes held (but it is more often denied) that such enlargement also extends the time for removal; but an enlargement of his time to plead rests in the discretion of the court. His right of removal is a legal right, and ought not to hang upon the grace of the court. He ought not to be required to resort to such indirection. He may be ready to plead, and ready for trial. An extension may mean the loss of a term, and the forced postponement of the settlement of important interests, for the determination of which both parties are anxious. Our judgment is, and until the rule is otherwise authoritatively settled must be, that the requirement of section 3 as to filing petition and bond in the suit in the state court is met by the filing of such papers with the records of the case in the office of the clerk who is the legal and actual custodian of the court’s records, and that the filing of such papers, sufficient on their face, has the effect to arrest the jurisdiction of the state court, and prevent it from thereafter going forward, and entering judgment, as in the case at bar. We think we should entertain and express these views from a careful study of the subject, and from what we understand to be the intent and logic of the removal act, even if we found no affirmative support in the adjudications • of other courts. We think it is the theory of the law that a foreign defendant may assert and make effective his right of removal by filing in the state court, as a part of the records of the case, in the usual manner of filing papers therein, a proper petition and bond, and that the courtesy to the state court which would hold in abeyance the legal effect of such petition and bond until the innocent and perfunctory ceremony of presenting the same to the state court, whose action is universally held to be without effect, is a legal affectation, that ought not to be indulged in to the extent of depriving a party of the substantial right which it was the design of the law to secure to him. The conclusions above announced are fully sustained by the opinion of Judge Shiras in Brown v. Murray, Nelson & Co., 43 Fed. Rep. 614, and of Judge Wallace in Noble v. Association, 48 Fed. Rep. 337. In the former case the opinion says: “It is not the presentation of the petition and bond to the court in open session that terminates the jurisdiction, but the filing of the same, so that the same become a part of the record of the particular suit.” In the latter case' it is said: “The statute does not require any notice of the proceeding to be given by the removing party to the adverse party, except by the filing of the petition and bond; and in my judgment, notwithstanding recent opinions to the contrary, by judges whose opinions are entitled to great weight, it does not require the removing party to present his petition or bond to a judge, either in vacation or in open court, but is satisfied when he files them with the official custodian of the records of the court.” Courtesy to the state court would undoubtedly suggest the presentation of the papers to it, so that it might be actually as well as judicially informed that its jurisdiction over the case had been arrested; but, as was sai’d in State v. Coosaw Min. Co., supra, comity has no place in determining the question as to the removal of a cause which is a matter of right.

We treat the petition and bond in this case as sufficient, without question or examination, for the reason that they were so treated by both sides upon the argument in this court, and were so treated below by both parties and court. The court below declined to accept the same, not because defective, — for no such suggestion was made, — but on the distinct ground that “judgment. has heretofore been entered.” The purpose of this appeal as contemplated by both sides, was evidently to have reviewed the question passed upon by the trial court, to wit, the legal effect of the filing of the petition and bond in the clerk’s office, without actual presentation of the same to the court until after the default judgment had been entered. In the opinion of a majority of this court, the state court had no authority to proceed in the case, and enter judgment against appellant, after the filing of the petition and bond. The judgment being unauthorized, it should have been set aside upon appellant’s application, and the order of the court refusing is hereby reversed. The cause is remanded, with direction to the court below to vacate the judgment.