BAKER et al. v. HOWELL et al.

(Circuit Court, D. Nebraska. December 4, 1890.)

COURTS-JURISDICTIONAL AMOUNT-PROTEST FEES.

Protest fees are taxable costs within Rev. St. U. S. § 983, providing that "lawful fees for exemplifications and copies of papers necessarily obtained for use on trials" shall be taxed as costs; and though Comp. St. Neb. c. 41, § 6, provides that the holder of a note may bring "an action for principal, damages, and interest, and charges of protest," yet such fees for protest cannot be considered as part of the "matter in dispute" within Act Cong. March 3, 1887, § 1, (24 St. 552,) as corrected by Act Cong. Aug. 13, 1888, (25 St. 434,) restricting the jurisdiction of the United States circuit court to suits "where the matter in dispute exceeds, exclusive of interest and costs, the sum or value of $2,000. "

At Law.

Gregory, Day & Gregory, for plaintiff.
E. M. Bartlett, for defendant.

Before CALDWELL and DUNDY, JJ.

CALDWELL, J. The act of congress of March 3, 1887, § 1, (24 St. 552,) as corrected by Act Aug. 13, 1888, (25 St. 434,) restricts the jurisdiction of this court, in respect to the amount necessary to give jurisdiction, to suits "where the matter in dispute exceeds, exclusive of interest and costs, the sum or value of two thousand dollars.” This suit is founded on a promissory note for the sum of $2,000, and is brought against the makers and indorsers. The petition contains an allegation "that the notary fees for the due presentation and protest of said note were and are of the full sum of three and 50-100 dollars, which the plaintiffs were required to pay, and did pay;" and this is set up and relied on as an additional substantive indebtedness to make the matter in dispute exceed $2,000. The question for decision is, are the notary's fees to be treated as "costs," within the meaning of that word as used in the act of congress, or as an independent substantive debt, which may be used to increase the sum of "the matter in dispute." The stat ute of this state provides that the holder of any note may bring "an action for principal, damages, and interest, and charges of protest against the drawers, makers, and indorsers" of the same. Comp. St. Neb. c. 41, 6. The act regulating and establishing the fees of public officers in this state fixes the fees of a notary for each protest, recording the same, and giving notice of protest, (Id. c. 28, § 19,) and makes his certificate, that he demanded payment and gave notice of non-payment, presumptive evidence of these facts, (Id. c. 61, § 6.) The sum paid by the plaintiffs to the notary was for an official service performed by a public officer for a fee fixed by statute. This official act was a necessary. step to be taken by the plaintiffs to fix the liability of the indorsers, and to perpetuate and procure record evidence of their cause of action against them. It is true that the demand of payment may be made, and notice of non-payment given, by any person competent to testify as a witness, but in such a case there is always the danger that the witness may

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die, or that he cannot be found when wanted to prove the facts. The law, therefore, wisely makes provision for having this service performed by a public officer, who is required to keep a record of his official action, and this record the law of this state makes presumptive evidence of the facts therein stated. It is the making of this record that entitles the notary to the fees provided by law. He is entitled to no fees unless he makes this record; and, when the holder of the protested paper pays these fees, he is entitled to have them taxed as part of his costs, if he recovers judgment on the protested note. The costs of protest are incident to the recovery on the protested note, and are no part of the debt sued for. They are no such part of the "matter in dispute" as to give the court jurisdiction by increasing the amount involved. It is an error to suppose that no expense is taxable as costs save such as is incurred after suit brought. All expenses incurred by the plaintiff in procuring and perpetuating evidence of his demand against the defendant before suit brought, as well as all expenses incurred in the prosecution of the suit, which the law provides he may recover from the defendant, are costs. Section 983 of the Revised Statutes of the United States pro

vides that

"The bill of fees of the clerk, marshal, and attorney, and the amount paid printers and witnesses, and lawful fees for exemplifications and copies of papers necessarily obtained for use on trials in cases where by law costs are recoverable in favor of the prevailing party, shall be taxed by a judge or clerk of the court, and be included in and form a portion of a judgment or decree against the losing party. Such taxed bills shall be filed with the papers in the cause."

This section is conclusive of this case.

Under this section, which is a part of the fee bill established by Act Cong. 1853, it is the uniform practice of the United States courts to allow the plaintiff as part of his costs the protest fees allowed by law, and paid to the notary, whether claimed in the complaint or not. I have been familiar with the practice in one district for a quarter of a century, in which it was the rule to treat the protest fees as costs, and tax them accordingly, as of course, though not mentioned in the complaint, and in all that time the correctness of the practice was never challenged. Where public records or certified copies of such records are necessary evidence for a party, he may procure the same, and the fees allowed by law to the officers making and certifying said records are, under section 983, taxable as part of his costs in the case, if he succeeds, without regard to the fact whether such records were procured before or after suit brought. Hussey v. Bradley, 5 Blatchf. 134; Dennis v. Eddy, 12 Blatchf. 195; Gunther v. Insurance Co., 10 Fed. Rep. 830; Fost. Fed. Pr. 494; Huntress v. Epsom, 15 Fed. Rep. 732. The notarial protest in this case is precisely such a record, and the fees for making and obtaining it are costs, and taxable as costs. Deducting these costs, the matter in dispute in this cause, "exclusive of interest and costs," does not exceed the sum of $2,000. On a question of jurisdiction, the court has no discretion but to give effect to the act of congress without liberality of intendment or construction.

The act of congress provides that, if it shall appear to the satisfaction of the court at any time after a suit brought or removed into this court that such suit "does not really and substantially involve a dispute or controversy properly within its jurisdiction," the court shall proceed no further, but shall dismiss the suit or remand it. In obedience to this injunction of the statute, this cause must be dismissed.

DUNDY, J., concurs.

FARMERS' LOAN & TRUST Co. v. HOUSTON & T. C. Ry. Co. et al.

(Circuit Court, E. D. Texas. October 20, 1890.)

FORECLOSURE OF MORTGAGES-JURISDICTION-PARTIES-Substituted SERVICE. Where a railroad which is in the hands of a receiver appointed by a United States circuit court is sold under a decree of foreclosure to satisfy a junior deed of trust, and, while the property is still being administered by the court through its receiver, suit is brought in the same court against the company by the trustee in the elder deed of trust to foreclose it, the court having jurisdiction of the subject-matter has authority to make the purchaser under the first foreclosure sale, which was made subject to the prior deed of trust, a party defendant, and to order substituted service of process upon him, notwithstanding the fact that he is a citizen of the same state as complainant.

In Equity. Motion of George E. Downs to set aside substituted service of process.

Willie, Mott & Ballinger, for complainant.

Rouse & Grant, for defendant Downs.

PARDEE, J. In the case of Nelson S. Easton and James Rintoul, Trustees, and The Farmers' Loan & Trust Company, Trustee, vs. The Houston & Texas Central Railway Company, a decree was rendered on the 4th day of May, 1888, for the sale of the Houston & Texas Central Railway, including that division of said railway known as the "Waco & Northwestern Division." The decree directed this particular division (Waco & Northwestern) to be sold in satisfaction of a deed of trust carrying a lien upon the property subsequent in date to a deed of trust held by the Farmers' Loan & Trust Company, upon which last deed of trust this proceeding is based. The aforesaid decree ordered the sale to take place subject to said prior deed of trust to the Farmers' Loan & Trust Company, and the sale was so thereafter made, the present mover, Downs, becoming the purchaser. The sale under the decree aforesaid was afterwards confirmed by the court, and the deed passed to the purchaser, which deed stated that it was made subject in all respects to the lien of the first mortgage in favor of said Farmers' Loan & Trust Company. At the time the decree aforesaid was rendered, and the sale made thereunder, and at the time the Farmers' Loan & Trust Company, trustee, instituted the present suit to foreclose the first mortgage upon the Waco &

Northwestern Division, and at the time of substituted service upon Downs, the said Houston & Texas Central Railway, including the Waco & Northwestern Division, was in the hands of a receiver appointed by this court in the case of Easton and Rintoul et al. vs. The Houston & Texas Central Railway Company, which receiver was holding and managing the said property under the orders of this court. The present suit was instituted against the Houston & Texas Central Railway Company as the only party defendant to the suit. By subsequent amendment, it was prayed that Downs be made a defendant also, as the purchaser of the property under the decree and proceedings aforesaid. On December 3, 1889, it being made to appear to the court that this suit is one commenced to enforce a lien upon real and personal property within the jurisdiction of the court at the time of the institution of the suit, and that the defendant George E. Downs is not an inhabitant of, or found within, the eastern district of Texas, but that he is a resident citizen of the city of Brooklyn, N. Y., an order was issued requiring said Downs to appear and plead to the suit. And this order having been served upon him, he did appear at the time appointed and pleaded that, at the date of the filing of the complaint, he was, and still was, a citizen of the same state as the complainant, to-wit, the state of New York, and could not be impleaded in the cause, this court being without jurisdiction in the premises; and thereupon obtained an order staying proceedings until the questions presented could be passed upon. That this court had lawful jurisdiction for the foreclosure of the mortgages, for the satisfaction of which the sale was made under which Downs bought, is not disputed. That such sale was ordered, and the deed to Downs made and accepted by him expressly reserving the rights to the complainant, is equally clear. It is not denied that the property was in the lawful custody of this court, which was administering it through a receiver appointed in the case of Easton and Rintoul vs. The Houston & Texas Central Railway Company when this present suit was commenced. It is not suggested that Downs is not a necessary and proper party to the present suit. It is clear that he could voluntarily make himself a party for the protection of his rights, and that without ousting the jurisdiction of the court. The question then to be determined at this time is whether, under the circumstances of this case as stated, the court has authority to make Downs a party defendant, and direct substituted service of process upon him. If the court has jurisdiction over the property and over Downs, there can be no question of the right to substituted service under the eighth section of the judiciary act of 1875. That it has jurisdiction of the property and of Downs' rights therein, notwithstanding the said Downs is a citizen of the same state as the complainant, presents a question that has been affirmatively decided by the supreme court of the United States in a number of cases. See Minnesota Co. v. St. Paul Co., 2 Wall. 609; Bank v. Calhoun, 102 U. S. 256; Krippendorf v. Hyde, 110 U. S. 276, 4 Sup. Ct. Rep. 27; Covell v. Heyman 111 U.S. 176, 4 Sup. Ct. Rep. 355. For these reasons it is ordered that the motion of George E. Downs of January 22, 1890, be denied, and that the order of

said date staying proceedings in said cause, so far as they should affect said Downs, be vacated, and that the said Downs be ordered to plead, answer, or demur to said bill of complainant within 20 days from this date.

GEORGE et al. v. ST. LOUIS CABLE & W. Ry. Co.

(Circuit Court, E. D. Missouri, E. D. September 23, 1890.)

1. CREDITORS' BILL-DISTRIBUTION OF PROCEEDS-LIEN OF TAXES.

Where the federal courts have appointed a receiver of the property of a judgment debtor in Missouri, and have ordered the property sold, and the receiver has been in possession thereof during the time when a levy might have been made thereon for taxes on the personalty, the court will direct the payment of such taxes out of the proceeds of the sale in preference to all other claims, though the sale was ordered to be made "subject to all liens for taxes," as taxes on personalty are not a lien thereon until levy under the tax-bill, in Missouri.

2. SAME.

But as the state has a paramount lien for taxes on realty, and the sale was subject thereto, such taxes will not be ordered paid out of the proceeds. 3. SAME-WHO MAY SHARE IN DISTRIBUTION.

Where the proceeds of a sale of a debtor's property on judgment creditors' bill are insufficient to pay the judgment creditors, and there has previously been no appli cation to the payment of judgment creditors of any of the debtor's property which should have been applied to the payment of open accounts, the holders of such accounts cannot participate in the proceeds of the sale.

4. SAME-INTERVENTION.

Where a bill to reach property which cannot be effectively reached at law is filed by certain judgment creditors for the benefit of all judgment creditors of defendant, and no order is made requiring others to intervene by a certain time or be barred of their rights, all judgment creditors who choose to intervene may share ratably with complainants in the proceeds of a sale of the property, even though some do not intervene until after the interlocutory decree ordering the sale. 5. SAME.

It does not affect the right of such subsequent intervenors to share ratably that the bill prays that after a sale the proceeds may be distributed among the persons in whose behalf the suit is brought "according to their respective rights and equities," where the original complainants and prior intervenors had no prior lien on all the property sold when the bill was filed.

In Equity.

On the 17th of October, 1889, three non-resident judgment creditors of the St. Louis Cable & Western Railway Company filed a bill in behalf of themselves and all other judgment creditors against the railway company, to obtain the appointment of a receiver of the judgment debtor's property, and a decree for the sale of the same for the payment of their debts, according to the respective rights of the several creditors, as they might be adjudged. The bill stated, in substance, that the defendant company owned a railroad extending from a point within the city of St. Louis to Florissant, in the adjoining county of St. Louis; that it was largely indebted and insolvent, owing, among other debts, a debt of $1,000,000, which was secured by a mortgage lien on all of the defendant company's rights, property, and franchises; that the complainants had no adequate legal remedy to reach and sell the property of the company, because its road was located partly in the city and partly in the county of St. Louis, and,