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It is further urged that the construction given by the state court to its Constitution impaired the obligation of a contract, resulting from the acceptance of the granted lands by the state of Montana, and that this impairment was in violation of the Constitution of the United States. Nothing more need be said of that claim than that it appears for the first time in the petition for a writ of error from this court, and the accompanying assignment of errors. This is not sufficient to give this court jurisdiction of any Federal question (Corkran Oil & Development Co. v. Arnaudet, ubi supra), even though another Federal question has been properly raised and brought here by the same writ of error (Dewey v. Des Moines, 173 U. S. 193, 43 L. ed. 665, 19 Sup. Ct. Rep. 379). Other questions were argued, but the view we have taken of the case renders it unnecessary to consider them.
Messrs. Newton Wyeth, Warren B. Wilson, and Walter L. Fisher for defendant in error.
Mr. Justice Holmes delivered the opinion of the court:
This case comes up on the single question of the jurisdiction of the circuit court, which was saved by bill of exceptions and stipulation, and which is certified to this court. The defendant in error, the original plaintiff, and hereafter called plaintiff, is an Illinois corporation; the plaintiff in error is a purely local Indiana corporation, organized for the furnishing of heat, light, and power in Indianapolis. The questions are whether the service of the writ was good (Board of Trade v. Hammond Elevator Co. 198 U. S. 424, 435, 49 L. ed. 1111, 1116, 25 Sup. Ct. Rep. 740), or, if not, whether the defendant submitted to the jurisdiction. The material facts are these: The service was upon one Schott in Chicago. By the laws of Illinois a foreign corporation may be served with process by leaving a copy with its general agent, or with any
The judgment of the Supreme Court of agent of the company. Schott had an entire Montana is therefore affirmed.
contract with the defendant by which he was to build and equip the plant, assume general management of it, and operate it for the company until fully completed, "approve
MERCHANTS HEAT & LIGHT COMPANY, contracts therefor," certify bills, and have
Plff. in Err.,
JAMES B. CLOW & SONS.
Writ and process-service on foreign corporation-effect of setting up cross claim.
The lack of any valid service of process upon a foreign corporation does not defeat the jurisdiction of a Federal circuit court of an action in which such corporation pleaded in its answer a demand in recoup: ment, especially since, under the local practice, as defined in Ill. Rev. Stat. chap. 110, §§ 30, 31, the defendant may have a verdict and judgment in his favor if it appears that the plaintiff is indebted to him for a balance when the two claims are set against each other, and, after the cross claim is set up, the plaintiff is not permitted to dismiss his suit without the consent of the defendant or leave of court granted for cause shown.
the heating plant ready for service on December 1, 1902, and finally finished by July 1, 1903. Schott was acting as general manager under this contract at the date of service, March 23, 1903, and did any purchasing required for the company in Illinois. In the same capacity he made the contract sued upon, which was for materials to be used for equipping the plant. He made it in the city of Chicago. After the suit was begun, a motion to quash the return of service was made and overruled, and thereupon the defendants, after excepting, appeared, as ordered, and pleaded the general issue and also a recoupment or set-off of damages under the same contract, and overcharges, in excess of the amount ultimately found due to the plaintiff. There was a finding for the plaintiff of $9,082.21.
It is tacitly conceded that the provision as to service does not apply unless the forArgued January 15, 1907. Decided January eign corporation was doing business in the
N ERROR to the Circuit Court of the United States for the Northern District of Illinois to review a judgment in favor of plaintiff in an action on a contract against a foreign corporation. Affirmed.
The facts are stated in the opinion. Messrs. W. H. H. Miller, James W. Fesler, C. C. Shirley, and Samuel D. Miller for plaintiff in error.
state. If it was, then, under the decisions of this court, it would be taken to have assented to the condition upon which alone it lawfully could transact such business there. Old Wayne Mut. Life Asso. v. McDonough, 204 U. S. 8, 51 L. ed. 345, 27 Sup. Ct. Rep.
Whether the purchase of materials for the construction or equipment of its plant, as a preliminary to doing its regular and proper business, which necessarily would be trans
acted elsewhere, in the state of its incorporation, is doing busines, within the meaning of the Illinois statute, was argued at length and presents a question upon which the decisions of the lower courts seem not to have agreed. We shall intimate no opinion either way, because it is not necessary for the decision of the case, in view of the submission to the jurisdiction which the facts disclose. We assume that the defendant lost no rights by pleading to the merits, as required, after saving its rights. Harkness v. Hyde, 98 U. S. 476, 25 L. ed. 237; Southern P. Co. v. Denton, 146 U. S. 202, 36 L. ed. 943, 13 Sup. Ct. Rep. 44. But by setting up its counterclaim the defendant became a plaintiff in its turn, invoked the jurisdiction of the court in the same action, and, by invoking, submitted to it. It is true that the counterclaim seems to have arisen wholly out of the same transaction that the plaintiff sued upon, and so to have been in recoupment rather than in set-off proper. But, even at common law, since the doctrine has been developed, a demand in recoupment is recognized as a cross demand, as distinguished from a defense. Therefore, although there has been a difference of opinion as to
as to when a defendant becomes so far an actor as to submit to the jurisdiction, but we are aware of none as to the proposition that when he does become an actor in a proper sense he submits. De Lima v. Bidwell, 182 U. S. 1, 174, 45 L. ed. 1041, 1047, 21 Sup. Ct. Rep. 743; Fisher v. Shropshire, 147 U. S. 133, 145, 37 L. ed. 109, 115, 13 Sup. Ct. Rep. 201; Farmer v. National Life Asso. 138 N. Y. 265, 270, 33 N. E. 1075. As we have said, there is no question at the present day that, by an answer in recoupment, the defendant makes himself an actor, and, to the extent of his claim, a cross plaintiff in the suit. See Kelly v. Garrett, 6 Ill. 649, 652; Ellis v. Cothran, 117 Ill. 458, 461, 3 N. E. 411; Cox v. Jordan, 86 Ill. 560, 565. Judgment affirmed.
Mr. Justice Brewer, Mr. Justice Peckham, and Mr. Justice Day dissent.
CITY OF CHICAGO, Appt.,
whether a defendant, by pleading it, is con- Direct appeal from circuit court-sufficiency cluded by the judgment from bringing a subsequent suit for the residue of his claim, a judgment in his favor being impossible at common law, the authorities agree that he is not concluded by the judgment if he does not plead his cross demand, and that whether he shall do so or not is left wholly to his choice. Davis v. Hedges, L. R. 6 Q. B. 687; Mondel v. Steel, 8 Mees. & W. 858, 872; O'Connor v. Varney, 10 Gray, 231. This single fact shows that the defendant, if he elects to sue upon his claim in the action against him, assumes the position of an actor and must take the consequences. The right to do so is of modern growth, and is merely a convenience that saves bringing another suit, not a necessity of the defense.
1. The failure of the certificate of a Federal circuit court to show the exact nature of the jurisdictional question relied upon to sustain a direct appeal to the Supreme the latter court, where an examination of wheth-Court does not defeat the jurisdiction of the record, aided by the opinion of the circuit court, contained therein and made part thereof, distinctly shows the nature of the question of jurisdiction passed upon.* Courts-jurisdiction of circuit court-diverse citizenship-collusion.
If, as would seem and was assumed by the form of pleading, the counterclaim was within the Illinois statutes (Charnley v. Sibley, 20 C. C. A. 157, 34 U. S. App. 705, 73 Fed. 980, 982), the case is still stronger. For by that statute the defendant may get a verdiet and a judgment in his favor if it appears that the plaintiff is indebted to him for a balance when the two claims are set against each other; and after the cross claim is set up the plaintiff is not permitted to dismiss his suit without the consent of the defendant or leave of court granted for cause shown. Ill. Rev. Stat. chap. 110, §§ 30, 31; East St. Louis v. Thomas, 102 Ill. 453, 458; Butler v. Cornell, 148 Ill. 276, 279, 35 N. E. 767.
2. The jurisdiction of the circuit court of the United States for the northern district of Illinois of a suit brought by a California stockholder of an Illinois gas company, after the company's refusal to sue, to enjoin the city of Chicago from enforcing an ordinance regulating gas rates, on the ground of want of power in the municipality to pass the ordinance, cannot be regarded as collusively or fraudulently invoked because of complainant's motive in preferring a Federal tribunal, or because subsequent events made it to the interest of the company to make common cause with him against the enforcement of the ordinance, or because an officer and large stockholder in such company personally contributed to the expenses of the suit, or because complainant's counsel was afterwards retained in a suit then pending between the company and the municipality.†
Submitted December 21, 1906. Decided Feb-
There is some difference in the decisions
Mr. Justice Day delivered the opinion of the court:
This case is here upon a question of jurisdiction of the circuit court of the United States for the northern district of Illinois to entertain the suit. 26 Stat. at L. 826, chap. 517, U. S. Comp. Stat. 1901, p. 488. The case originated in a bill filed in that court by the complainant, Darius O. Mills, a citizen of California, as a stockholder in the People's Gas, Light, & Coke Company, a corporation of the state of Illinois, to restrain the city of Chicago from enforcing a certain ordinance limiting the right of the gas company as to charges for furnishing gas.
Complainant averred a demand of the directors that an action be brought by the company to restrain the city from enforcing the ordinance, and alleged compliance with the ninety-fourth equity rule, and the refusal of the company to bring the action.
The original bill alleged that the ordinance impaired the obligation of the contract contained in the charter of the gas company, in contravention of the contract clause of the Federal Constitution; and, also, that the ordinance was illegal in that the city had no power to pass it.
The ordinance thus complained of was adopted by the city of Chicago, October 15, 1900, and provided that charges for gas in excess of 75 cents per 1,000 cubic feet should be illegal, and fixed a penalty of not less than $25 or more than $200 for each and every violation of the ordinance.
cuit court of the United States. A certifi cate entered the same term at which the appeal was allowed sets forth that the city objected to the jurisdiction of the court as a Federal court, and that the appeal was prayed solely upon the question of jurisdiction of the court as a circuit court of the United States, and that the appeal was granted solely upon the question of jurisdiction.
Portions of the proceedings, including the testimony on the question of jurisdiction, duly signed and sealed and made part of the record, are certified to this court by a certificate in the form of a bill of exceptions. Re Lehigh Min. & Mfg. Co. 156 U. S. 322, 39 L. ed. 438, 15 Sup. Ct. Rep. 375; G. H. Nichols Lumber Co. v. Fransom (decided at this term), 203 U. S. 278, ante, 102, 27 Sup. Ct. Rep. 102.
A preliminary objection is made that the certificate does not show whether the jurisdictional question arose from insufficient amount, want of diversity of citizenship, collusion, or otherwise. But we are of the opinion that an examination of the record, aided by the opinion of the court contained therein, and made part thereof, distinctly shows that the question of jurisdiction passed upon concerned the collusive character of the action of the complainant.
We think this brings the case within the ruling in Smith v. McKay, 161 U. S. 355, 40 L. ed. 731, 16 Sup. Ct. Rep. 490, in which the court, looking into the character of the appeal, the certificate of the court, and the certified copy of the opinion, made part of the record, sustained the court's jurisdiction, citing, with approval, Shields v. Coleman, 157 U. S. 168, 39 L. ed. 660, 15 Sup. Ct. Rep. 570, and Re Lehigh Min. & Mfg. Co. supra.
The circuit court, after an examination of the testimony, reached the conclusion that the action was not collusive, and, upon final decree, granted perpetual injunction against the enforcement of the ordinance in question. On this appeal we are only concerned with the correctness of the conclusion reached in the circuit court as to the question of jurisdiction. This question is before Wetmore v. Rymer, us upon this record.
169 U. S. 115, 42 L. ed. 682, 18 Sup. Ct. Rep. 293. In order to determine it it is necessary to consider briefly as may be the facts shown in this record.
The objection made to the jurisdiction of the circuit court, and which is said to be established in the record and duly presented here, is based upon the allegation that the suit by Mills was brought in the Federal court by collusion between him and the gas company, and for the fraudulent purpose of The ordinance in question was passed Ocinvoking the jurisdiction of the Federal court concerning a controversy which was really tober 15, 1900. The People's Gas, Light, & between the company and the city of Chi-Coke Company, on the 21st of December, cago,-parties lacking the requisite diversity of citizenship to maintain the suit in the Federal courts.
The record discloses that the appeal was allowed to this court solely upon the question of the jurisdiction of the court as a cir
1900, brought a suit in the circuit court of the United States for the northern district of Illinois, seeking to enjoin enforcement of the ordinance, upon the ground that it impaired the obligation of its charter contract, denied equal protection of the laws, and
amounted to a confiscation of its property; | Mills, and a difference of opinion was deand upon the further ground that no power had been conferred upon the city of Chicago by the legislature of Illinois to thus regulate the price of gas.
It is unnecessary to recite all of the proceedings of that suit in detail. The history of the litigation will be found in the opinion of the chief justice when the case came here from the circuit court on appeal (194 U. S. 1, 48 L. ed. 851, 24 Sup. Ct. Rep. 520).
To the bill as originally filed in that case the city of Chicago filed a general demurrer, and the circuit court, holding that no constitutional right of the company was impaired, decided that its jurisdiction would not extend to the question of the power of the council to pass the ordinance in question, and that such a question was one primarily for the state courts; thereupon the company filed an amended bill, limiting its rights to the alleged impairment of its contract. The city of Chicago also demurred to the amended bill, and, upon the hearing of the demurrer, it was sustained and the bill dismissed for want of jurisdiction, and a | final decree was entered to that effect. An appeal was thereupon taken to this court.
When the litigation had progressed thus far, complainant, Mills, who was the largest stockholder in the company, consulted counsel in New York with a view to protecting his interests. Counsel, having examined the record, prepared a letter dated December 16, 1902, addressed to the directors of the gas company, and signed by complainant, in which he set forth that the proceedings in the suit concerning the ordinance reducing the price of gas to 75 cents per 1,000 cubic feet had been submitted to his counsel, together with a copy of the opinion of the circuit court, and that an appeal was then pending in the Supreme Court of the United States; the advice of his counsel that that suit might not adequately protect his interests, as the bill was dismissed for want of jurisdiction, and that the Supreme Court might limit the decision of the case to the question of jurisdiction. And, further, that it did not involve the question of the power of the council of the city of Chicago to reduce the rates of the company. He then requested the institution of a suit against the city of Chicago at the earliest practicable moment for the purpose of preventing the enforcement of the ordinance, upon the ground that it impaired its charter contract and that the council had no power to pass it. The letter further expounded the necessity of resorting to a court of equity for protection of the company's rights.
The record discloses that the company's counsel came to New York, where a conference was had with the counsel retained by
veloped as to the propriety and advisability of a new suit which would cover the points in difference. The result of this conference was that the company's counsel notified counsel for Mills that he should advise the board to decline the request to bring a new suit.
On January 29, 1903, the company wrote to Mills, declining to begin the suit, and sent a copy of the resolution reciting the belief of the board that for the company to institute further legal proceedings to test the validity of the ordinance of October 15, 1900, would excite public prejudice against the company, which at that time it was deemed of great importance to avoid, and afterwards, at the annual meeting of the stockholders of the company, a resolution directing the beginning of the suit was defeated.
The question of jurisdiction must be decided, having reference to the attitude of the case at the date the bill was filed, on June 8, 1903. Kirby v. American Soda Fountain Co. 194 U. S. 141, 145, 146, 48 L. ed. 911, 912, 913, 24 Sup. Ct. Rep. 619. As to the refusal of the company to institute a new suit, there is nothing in the record to show any concert of action between complainant and the company. At that time his counsel in New York was not concerned in the litigation in Chicago or in the appeal to this court.. As the case brought by the gas company then stood, it had been dismissed for want of jurisdiction, and an appeal taken from that decree of dismissal. The case did not necessarily involve the question of contract rights, and did not embrace the question of power of the city.
In this attitude of affairs counsel might well advise that the protection of the stockholders' interest required the beginning of a suit which should embrace the vital questions in issue. There was a sharp difference of views between the representatives of Mills and those of the company's solicitors. as to the advisability of bringing an action.
For the prudential reasons outlined in their letter of January 29, 1903, above referred to, the directors of the company declined to bring the suit. After the judgment of the circuit court was affirmed in this court, the question of the power of the city to pass the ordinance was left undecided, and was subsequently litigated to a final decree in favor of the contention made in the suit begun by Mills.
It is true that upon the hearing of the demurrer in this action the circuit court ordered a decree correcting its former decree in the gas company suit so as to show that the court decided the case upon the merits. as to the allegations as to contract, and dismissed the bill without prejudice to the
bringing of any other suit to test the power | Ct. Rep. 427, and previous cases in this court of the city. therein cited.
The corrected decree was brought before this court in the then pending appeal of the gas company. 194 U. S. 1, 48 L. ed. 851, 24 Sup. Ct. Rep. 520.
After the decision in this court, affirming the decree in the gas company suit, an amended bill was filed by complainant Mills, based solely upon the alleged want of power of the city council of Chicago to pass the ordinance in controversy, which resulted in the decree to which we have referred, enjoining the enforcement of the ordinance, for the reason that the city council of Chicago had no power to pass the same.
As we have said, we think the record establishes that complainant and his counsel honestly believed that such new suit was necessary to protect the stockholders' interests. There is an entire lack of testimony to show any collusive action at the time of the beginning of the suit.
It is true that subsequent events made it to the interest of the company to make common cause with Mills against the enforcement of the ordinance in question, but when he began his suit no proceedings were pending which involved the important question of the power of the city upon which the complainant ultimately prevailed.
It is true that an officer of the company, who was the next largest stockholder to Mills, contributed to the expenses in this suit; but he testified, and there is nothing in the record to contradict him, that he paid this money from his own resources, without actual repayment, or any understanding with the company that he should be reim
It is true that Mills' counsel was retained in the suit in this court after the beginning
of his suit in Chicago.
Upon the whole record we agree with the circuit court that the testimony does not disclose that the jurisdiction of the Federal court was collusively and fraudulently invoked, and the judgment below will be affirmed.
Dissenting: Mr. Chief Justice Fuller and Mr. Justice Harlan.
ORLANDO F. BACON, Plff. in Err.,
PAUL H. WALKER et al. Constitutional law-due process of law-restrictions on sheep grazing.
1. An owner of sheep is not deprived of his property without due process of law by Idaho Rev. Stat. §§ 1210, 1211, under which damages may be recovered from him for lic domain within 2 miles of a dwelling permitting his sheep to graze on the pubhouse.*
Constitutional law-police power of statelimits.
2. The police power of a state is not confined to the suppression of what is offensive, disorderly, or unsanitary, but embraces regulations designed to promote the public convenience or the general prosperity.† Constitutional law-equal protection of the
3. An arbitrary and unreasonable discrimination against the sheep industry, prohibited by the guaranty in U. S. Const. 14th Amend. of the equal protection of the laws, is not made by Idaho Rev. Stat. §§ 1210, 1211, under which damages may be recovered from one who permits his sheep to graze on the public domain within 2 miles of a dwelling house.
It is also true that, in answering to a question put in the language of the ninety- Argued January 10, 1907. Decided Febru
fourth rule, as to whether the suit was brought to confer upon the circuit court of the United States jurisdiction in a case of
which it would not otherwise have cognizance, complainant answered that he so understood it, but subsequently said that he did not understand the question. This admission, intentionally made, would not necessarily show collusion. But we think it was not the purpose of the complainant to say more than that he expected his action to be brought in the United States court. When a citizen of one state has a cause of action against a citizen of another state which he may prosecute lawfully in a Federal court, and when the suit is free from fraud or collusion, his motive in preferring a Federal tribunal is immaterial. Blair v. Chicago, 201 U. S. 400, 408, 50 L. ed. 801, 805, 26 Sup.
ary 4, 1907.
N ERROR to the Supreme Court of the
State of Idaho to review a judgment which affirmed a judgment of the District Court for the County of Elmore, in that state, which had in turn affirmed a judgment
of the Justice's Court of Little Camas Pre
cinct, in such county, for the recovery of damages sustained by the violation of a statute prohibiting the grazing of sheep on the public domain within 2 miles of a dwelling house. Affirmed.
See same case below (Idaho) 81 Pac. 155. The facts are stated in the opinion. Messrs. S. M. Stockslager, W. E. Borah, Frank T. Wyman, and John C. Rice for plaintiff in error.
No counsel for defendants in error.
*Ed. Note.-For cases in point, see vol. 10, Cent. Dig. Constitutional Law, § 838. +Ed. Note.-For cases in point, see vol. 10, Cent. Dig. Constitutional Law, § 148. Ed. Note.-For cases in point, see vol. 10, Cent. Dig. Constitutional Law, § 688. 27 S. C.-19.