Turner v. Southern Home Building & Loan Ass'n

101 F. 308, 41 C.C.A. 379, 1900 U.S. App. LEXIS 4410

Opinion

MAXEY, District Judge,

after stating the case, delivered the opinion of the court

The first point to be considered is the error assigned which challenges the jurisdiction of the circuit court on the ground that the amount in dispute does not exceed, exclusive of interest and costs, the sum of $2,000. By the act of August 18, 1888, it is provided “that the circuit courts of the United States shall have original cognizance, concurrent with the courts of the several states, of all suits of a civil nature, at common law or in equity, * * * in which there shall be a controversy between citizens of different: states, in which the matter in dispute exceeds, exclusive of interest and costs,-the sum or value aforesaid” (that is, $2,000). 25 Stat. 434, § 1. “By the matter in dispute,” it was said by the supreme court in Lee v. Watson, 1 Wall. 339, 17 L. Ed. 558, “is meant the subject of litigation, — the matter for which the suit is brought, and upon which issue is joined, and in relation to -which jurors are called and witnesses examined. In an action upon a. money demand, where the genera.! issue is pleaded, the matter in dispute is the debt claimed; and its amount, as stated in the body of the declaration, and not merely the damages alleged, or the prayer for judgment at its conclusion, must, be considered.” Gray v. Blanchard, 97 U. S. 564, 24 L. Ed. 1108; Schacker v. Insurance Co., 93 U. S. 211, 23 L. Ed. 862. In the present case suit was brought to recover, in addition to interest and costs, the sum of $2,000, as the principal of the loan advanced; $204, as stock dues; and $200, as attorney’s fees. The $2,000 advanced by the appellee to the appellant B. D. Turner and O. F. Paine, deceased, on their 20 shares of stock, was evidenced by a bond executed by Turner and Paine, by the terms of which they agreed to pay to the appellee, so long as it should continue to exist, or as might be provided in its by-laws, rules, and regulations, the sum of $12 monthly as installments on the stock, and the further sum of $10 monthly as interest on the advance of the principal sum, and the additional sum of $10 as premium or redemption money on the advance. And they further agreed to comply with all the requirements of the by-laws, rules, and regulations of the appellee. The deed of trust, which was executed hv Turner and Paine and their wives to further secure the appellee in the ultimate payment of the money loaned, provided for a sale by the trustee of the property mortgaged, in the event that Turner and Paine should fail or neglect for the space of three months to fulfill, keep, and comply with the conditions, provisions, and agreements, or any part thereof,, contained in the bond. The proceeds of the sale were directed by the trust deed to be distributed as follows: First, to the payment of the costs and expenses connected with the execution of the trust, including- a reasonable attorney’s fee; and, second, to the payment of the amount of the principal debt, with all interest and arrears thereon, together with the monthly dues upon the stock, and the unpaid premiums upon the same, etc.; and the residue was directed to be paid to Turner and Paine, or their legal representatives. The bill of complaint alleged that Turner and Paine had failed to pay any installment of interest or premium on the bond, or stock dues upon the stock, since the 1st day of May, 1897, and that therefore the bond had become due and payable. It is, however, insisted by the appellants that it was only in the event of a sale by the trustee that the principal sum matured. We think- this contention cannot be sustained. By the terms of the deed of trust, as already explained, the trustee was authorized to sell the property, and apply the proceeds of the sale to the payment of the principal debt, the unpaid interest, premiums, and stock dues, in the event that the obligors in the bond should fail or neglect for the space of three months to comply with the conditions of the bond. That the parties did fail to comply with the conditions of their bond, and that such failure had continued for a much longer period than three months when the appellee filed its bill, is clearly shown by the testimony. The loan of $2,000 thus became due, and that sum, added to the $204 due on stock installments which was recoverable by suit (End. Bldg. Ass’ns, § 451), exceeded the jurisdictional amount, and it rested with the appellee to say whether, in order to enforce the payment of its claim, it would proceed summarily to sell the property, or invoke the aid of a-court of equity. Morrison v. Bean, 15 Tex. 267; Morgan’s L. & T. R. & S. S. Co. v. Texas Cent. Ry. Co., 137 U. S. 171, 11 Sup. Ct. 61, 34 L. Ed. 625; Guaranty Trust & Safe-Deposit Co. v. Green Cove Springs & M. R, Co., 139 U. S. 137, 11 Sup. Ct. 512, 35 L. Ed. 116; 2 Jones, Mortg. § 1443. In computing the amount in dispute between the parties, it is not material to consider the item of attorney’s fees (Fowler v. Trust Co., 141 U. S. 384, 12 Sup. Ct. 1, 35 L. Ed. 786), as the aggregate of the other two items is sufficient for jurisdictional purposes.

It is further insisted by the appellants that, although the $2,000' advanced should be regarded as due upon the failure to pay the monthly installments as they matured, still the amount in controversy, after deducting credits due them as shown by the decree and by the appellee’s own evidence, is only $1,307. It is trae that, upon a consideration of the entire case, the court decreed the sum of $1,307 to be due to the appellee; but it must be borne in mind that it is the amount in dispute between the parties, and not the amount ultimately adjudged to the plaintiff, that determines the question of jurisdiction. The appellant sought by its bill simply to enforce the payment of a claim which it alleged was due by Turner aDd Paine as borrowing stockholders. It was not the purpose of the bill to- affect their status or relationship to the' association as investing stockholders. If the appellants desired to withdraw their stock, and cancel tlie certificates issued to them as investing stockholders, and thus obtain credit for moneys paid into the loan fund, it could only be done by complying with the by-laws of the association. Andruss v. Association, 36 C. C. A. 336, 94 Fed. 575; Loan Co. v. Everheart (Tex. Civ. App.) 44 S. W. 885; Synnott v. Association (C. C.) 89 Fed. 292. Article 3 of the by-laws permits a non-borrowing member to withdraw his stock upon 60 days’ notice, except in case of the death of a member, whose personal representatives may withdraw Ms shares at any time. But by the same article the withdrawal of shares upon which loans have been made is prohibited unless the loan has been paid. Turner and Paine had the unquestioned right to pay off the loan and withdraw their stock,' — - a right of which they failed to avail themselves. But, to authorize a withdrawal of stock in any case, the notice required by the bylaws was a prerequisite; and the first notice, so far as the record ■discloses, of any inteniion on the part of the parties to withdraw their stock and terminate their relations with the association, was given in the answer of the appellants. Up to that time the amount for which a recovery was sought by the appellee appeared to be due, and whether the appellants would seek to put an end to their relationship as stockholders, by praying for an accounting and by the withdrawal of their stock, was purely defensive matter, which the appellee will not be presumed to have anticipated when its hill was filed. Hence the amount sought to be recovered by the appellee was the matter in dispute between the parties, of which the court had jurisdiction, — i. e. the right to hear and del ermine, — regardless of a defensé which may have been subsequently interposed by the appellants. In Schunk v. Moline, Milburn & Stoddart Co., 147 U. S. 505, 13 Sup. Ct. 417, 37 L. Ed. 258, it was said:

“In short, the fact of a valid defense to a cause of action, although apparent on the face of the petition, does not diminish the amount that is claimed, nor determine what is the matter in dispute; for who can say in advance that that defense will he presented by the defendant, or, if presented, sustained by the court? We do not mean that a claim evidently fictitious, and alleged simply to create a jurisdictional amount, is sufficient to give jurisdiction.”

See, also, Association v. Price, 169 U. S. 45, 18 Sup. Ct. 251, 42 L. Ed. 655; Pickham v. Manufacturing Co., 23 C. C. A. 391, 77 Fed. 663; Association v. Cunningham, 92 Tex. 155, 47 S. W. 714.

There is nothing in the record to disclose that the claim of the appellee is fictitious, nor that it was alleged to create a jurisdictional amount, and we are of opinion that the circuit court had jurisdiction of the suit.

The appellants also assign errors affecting the merits of the controversy, which we are not disposed to consider upon the present, appeal, as, in the view we take of the case, the decree must he reversed for the want of necessary'parties to the sui t. It may he also observed that the hill of complaint was not framed with the view of terminating the relationship of the appellants as stockholders in the association, nor did the prayer for relief either seek or justify an adjustment of the equities and an accounting between the parties. Let such was the effect of the decree, notwithstanding the absence of a cross bill, one of the principal offices of which is to obtain full and complete relief to all parties as to the matters charged in the original bill. Ayres v. Carver, 17 How. 592, 15 L. Ed. 179. Affirmative relief sought by a defendant in an equity suit should be by cross bill, and is not grantable upon facts stated in the answer. “The rule appears to be well established,” said Presiding Judge Pardee, speaking for the court, in Wood v. Collins, 8 C. C. A. 525, 60 Fed. 142, “that, in order to entitle a defendant in equity to affirmative relief, he should file a cross bill, which should be regularly served, put at issue, and heard as an original bill.” Railroad Co. v. Bradleys, 10 Wall. 299, 19 L. Ed. 894; Hill v. Grocery Co., 24 C. C. A. 624, 78 Fed. 21, and authorities cited. Hence' it would seem that in this case a cross bill would be eminently proper, if not necessary, to enable the parties to obtain complete relief.

In reference to the question of parties, it is disclosed by the record that C. F. Paine was one of the obligors in the bond upon which the suit was brought; that he owned 10 shares of stock in the association, for which a certificate had been issued to him; and that he was one of the grantors in the deed of trust. He died in 1894, and neither his heirs nor legal representatives were made parties to the suit; nor are any facts alleged, or otherwise shown by the record, which would dispense with the necessity of making them parties. The suit being in this condition, with the appellants only before it as defendants, the court adjusted the equities between the parties, adjudged upon an accounting, without the usual reference to a master, the sum of $1,307 to be due to the appellee on the bond, canceled the certificate of stock issued to the deceased, Paine, and ordered a foreclosure of the deed of trust. In this Ave think manifest error was committed. Terrell v. Allison, 21 Wall. 289, 22 L. Ed. 634; Hall v. Hall, 11 Tex. 526; Templeman v. Gresham, 61 Tex. 50.

As the case must be reheard in the trial court, the propriety of making Atkinson, the trustee named in the deed of trust, a party to the suit, is suggested for the consideration of counsel. Gardner v. Brown, 21 Wall. 36, 22 L. Ed. 527; Shipp v. Williams, 10 C. C. A. 247, 62 Fed. 4; Hammond v. Tarver (Tex. Sup.) 34 S. W. 729; Shelby v. Burtis, 18 Tex. 645. The decree of the circuit court is reversed, and the cause remanded, with directions to proceed in conformity with the views above expressed. The costs of this appeal Avill be divided equally between the parties. Reversed find remanded.