(268 U. S. 35) BALTIMORE & O. R. CO. v. CITY OF (Argued March 19, 1925. Decided April 13, No. 305. 1. Courts 382 (2)-No right of appeal to Supreme Court where diversity of citizenship is sole ground of federal jurisdiction. which overruled the demurrer, but made no order respecting the injunction. Within 30 days thereafter an answer was filed by leave. Then the cause stood without further action for 23 years. In 1921 activities were resumed leisurely. In 1923, upon demurrers and motions, the District Court for the Northern District of West Virginia (to which the case had been transferred pursuant to section 290 of the Judicial Code [Comp. St. § 1267]) en§tered a final decree for the plaintiff. The decree was reversed by the Circuit Court of Appeals. City of Parkersburg v. Baltimore & O. R. Co., 296 F. 74. The railroad appealed to this court. It also filed a petition for a writ of certiorari, consideration of which was postponed until the hearing on the appeal. Under Judicial Code, § 128 (Comp. St. 1120), no right of appeal from Circuit Court of Appeals to Supreme Court exists, where diversity of citizenship is sole ground of federal jurisdiction. 2. Courts 314-Federal court held without jurisdiction, on ground of diverse citizenship, of suit to enjoin levy of tax against railroad. Where Maryland corporation, purchaser at foreclosure sale of property and franchises of West Virginia railroad corporation, thereupon becoming West Virginia corporation as to such property, sued town in West Virginia to enjoin levy of tax, federal court did not have jurisdiction on ground of diverse citizenship, since, if suit was brought as West Virginia corporation, there was no diversity, and, if as Maryland corporation, West Virginia corporation was a necessary party, and prevented complete diversity of citizenship. Appeal from, and Petition for Writ of Certiorari to, the United States Circuit Court of Appeals for the Fourth Circuit. com [2] The claim asserted by the bill is this. In 1855 the Northwestern Virginia Railroad Suit by the Baltimore & Ohio Railroad Company against the city of Parkersburg. Company, a corporation organized under the Decree for plaintiff was reversed by the Cir-laws of Virginia, acquired from the town of cuit Court of Appeals (City of Parkersburg Parkersburg, an exemption from, or v. Baltimore & O. R. Co., 296 F. 74), and mutation of, municipal taxes on certain propplaintiff appeals and petitions for writ oferty within its limits. In 1863 the railroad certiorari. Writ of certiorari granted, decree reversed, and case remanded, with directions. ion of the Court. This suit was commenced in the Circuit Court of the United States for the District of West Virginia in 1894. The plaintiff is the Baltimore & Ohio Railroad, alleged to be a Maryland corporation; the defendant is the city of Parkersburg, a West Virginia corporation. The relief sought was to enjoin the levying of taxes assessed upon certain railroad property. The federal jurisdiction was invoked solely on the ground of diversity of citizenship. A temporary injunction issued upon the filing of the bill. In 1895 the case was heard upon demurrer to the bill and upon a motion to dissolve the injunction. In 1897 a decree was entered, and the municipality became domestic corporations of West Virginia, upon the organization of that state. In 1865 the property and franchises of the railroad were purchased by the Baltimore & Ohio at a foreclosure sale. Pursuant to the statutes of West Virginia then in force, the Baltimore & Ohio declared "that it would become a corporation as to said property, by the name of the Parkersburg Branch Railroad Company." bill was claimed as an incident of the propThe immunity from taxation asserted in the erty acquired on foreclosure, and also as and contracts made with the Parkersburg having been conferred by ordinances adopted, The levy seems to have Branch Railroad. been made upon property of that company. It was a West Virginia corporation. The 1 Code of Virginia 1860, tit. 18, c. 61, §§ 28, 29; Constitution of West Virginia (1863) art. 11, § 8; Baltimore & Ohio R. R. Co., Corporate History (1922) vol. 1, pp. 243, 247. See Chesapeake & Ohio Ry. Co. v. Miller, 114 U. S. 176, 182, 185, 5 S. Ct. 813, 29 L. Ed. 121, and Acts of West Virginia-1891, c. 32, p. 57; 1889, c. 23, p. 81; 1887 (extra session) c. 73, p. 218; 1883, c. 12, p. 13; 1882, c. 97, § 30, p. 277; 1881, c. 17, § 72, p. 237, and section 82, p. 240; 1877, c. 106, p. 138; 1872-73, c. 88, § 23, p. 228, and chapter 227, § 16, p. 724; 1865, c. 73, p. 62. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes (45 S.Ct.) bill sought to enforce its right. The capacity the Circuit Court of Appeals is to remand in which the Baltimore & Ohio sued to en- the case to the District Court for further force the right to immunity was not stated proceedings not inconsistent with this opinclearly in the bill. Apparently it sued ei- ion. *38 ther in its capacity as *owner (sole stockholder) of the West Virginia corporation or Reversed. Project Manager, et al. (268 U. S. 50) on the theory that, as to the property pur- NAMPA & MERIDIAN IRR. DIST. v. BOND, chased on foreclosure, it became itself the Parkersburg Branch Railroad Company. In neither view did the trial court have jurisdiction of the controversy. If the plaintiff sued as the corporate owner of the property, that is, as the Parkersburg Branch Railroad Company, but under the name of the Baltimore & Ohio, the trial court was without jurisdiction as a federal court, because both the Branch Railroad and the defendant were West Virginia corporations, and hence the controversy was wholly between citizens of the same state. If the Baltimore & Ohio sued as the Maryland corporation, owner of all the stock in the Parkersburg Branch Railroad Company, the trial court was without jurisdiction of the controversy, because the latter corporation, an indispensable party plaintiff, was not joined. Compare Davenport v. Dows, 18 (Argued March 6, 1925. Decided April 13, 1925.) No. 135. 222-Neces 1. Waters and water courses Lands within irrigation district, receiving der contract which required them to pay same water from government irrigation project un"operation and maintenance" charge per acre as similar project lands, held chargeable with their pro rata share of cost of constructing a drainage district to prevent injury to other project lands from seepage due to operation of system, nor was such charge an increase in construction charges which, under Reclamation Extension Act Aug. 13, 1914, § 4 (Comp. St. § 4713d), could not be charged against water users without consent of majority. [Ed. Note.-For other definitions, see Words tion.] Wall. 626, 21 L. Ed. 938. And it could not have been joined. Niles-Bement-Pond Co. v. Iron Moulders Union, 254 U. S. 77, 41 S. and Phrases, First and Second Series, OperaCt. 39, 65 L. Ed. 145. For then one of the plaintiffs would have been a citizen of West Virginia, there would no longer have been complete diversity of citizenship, and the jurisdiction of the trial court would have been ousted. 2. Waters and water courses 222-Lack of direct and immediate benefit to irrigation project lands held not to preclude assessment of pro rata cost of drainage. That lands within irrigation district, receivwater under contract from government irdiately benefited by drain constructed to prorigation project, were not directly and immetect other project lands from damage from seepage, held, under state law, not to preclude assessment of pro rata cost of such drain against project lands within district. Appeal from the United States Circuit Court of Appeals for the Ninth Circuit. So far as appears, the Branch Railroading was neither merged in, nor consolidated with, the Baltimore & Ohio. Nor was there a compulsory domestication of the latter in West Virginia. Martin's Administrator v. Baltimore & Ohio R. R. Co., 151 U. S. 673, 14 S. Ct. 533, 38 L. Ed. 311. We have, therefore, no occasion to consider the questions involved in St. Louis & San Francisco v. James, 161 U. S. 545, 16 S. Ct. 621, 40 L. Ed. 802; Louisville, New Albany & Chicago Ry. Co. v. Louisville Trust Co., 174 U. S. 552, 19 S. Ct. 817, 43 L. Ed. 1081; Southern Ry. Co. v. Allison, 190 U. S. 326, 337, 23 S. Ct. 713, 47 L. Ed. 1078; Missouri Pacific Ry. Co. v. Castle, 224 U. S. 541, 32 S. Ct. 606, 56 L. Ed. 875. Compare Memphis & Charleston R. R. Co. v. Alabama, 107 U. S. 581, 2 S. Ct. 432, 27 L. Ed. 518; Patch v. Wabash R. R. Co., 207 U. S. 277, 28 S. Ct. 80, 52 L. Ed. 204, 12 Ann. Cas. 518. It would seem that the District Court must, upon the remand of the case to it, en *39 ter a decree of dismissal. But, *as the question whether the trial court had jurisdiction does not appear to have been considered by either of the lower courts and was not discussed by the parties here, our direction to Suit for injunction by the Nampa & Meridian Irrigation District against J. B. Bond, Project Manager of the Boise Project of the United States Reclamation Service, wherein the Payette-Boise Water Users' Association, Limited, intervened. the Circuit Court of Appeals (288 F. 541), From a judgment of affirming a judgment of the District Court (283 F. 569), dismissing petition, plaintiff appeals. Decree affirmed. *51 *Messrs. H. E. McElroy, of Boise, Idaho, Will R. King, of Portland, Or., and Fremont Wood, of Boise, Idaho, for appellant. Mr. W. W. Dyar, of Washington, D. C., for appellee Bond. Mr. J. B. Eldridge, of Boise, Idaho, for appellee Payette-Boise Water Users' Ass'n, Limited. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes Mr. Justice SUTHERLAND delivered the an operating expense, and that the project opinion of the Court. lands in the district were liable for their proportionate part. Appellant is an irrigation district organized as a public corporation under the laws of Idaho. In 1915, its supply of water being insufficient to irrigate the lands of all its members, it entered into a contract with the United States, at that time engaged in the construction of the Boise irrigation project, for water to irrigate the unsupplied lands and for the construction of a drainage *52 The contract with the district, among other things, provides: "The project lands in the district shall pay the same operation and maintenance charge per acre as announced by the Secretary of the Interior for similar lands of the Boise Project. We agree with the courts below that the The district un-charge in question fairly comes within this provision. Section 4 of the Reclamation Extension Act, supra, prevents an increase in the construction charges to be imposed upon the water users without the consent of a majority of them after the amount thereof has been fixed. But this is far from saying that, after the completion of the irrigation system in accordance with the original plan in respect of which the construction charges were fixed, should the need arise to remedy conditions brought about by the use of the system, the government must bear the expense if a majority of the water users withhold their consent. Expenditures necessary to construct an irrigation system and put it in condition to furnish and properly to distribute a sup system *within the district. dertook to represent these lands in their relations to the government and collect from their owners and pay over to the government construction installments and operation and maintenance charges. The drainage system was constructed in accordance with the contract and the cost thereof, after deducting the amount chargeable to the old water right non-project lands within the district, was paid by the United States as a construction expense and, with other costs of construction, was charged ratably against all the project lands, being 40,000 acres within and 100,000 acres outside the district. After the construction cost, including this drainage, had been fixed by the government, it became necessary to drain project lands outside the district because they were being ruined for ag-ply of water are chargeable to construction; ricultural uses by the steadily rising ground level of seepage water due directly to the operation of the irrigation system. Thereupon the Secretary of the Interior authorized the construction of a drainage system for these lands, the cost to be charged to operation and maintenance, and to be borne ratably by all the water users upon project lands both within and without the district. [1] Appellant contended that this expenditure was not properly chargeable to operation and maintenance, but was an additional charge for construction, which appellant could not be required to collect and pay over under section 4 of the Reclamation Extension Act of August 13, 1914, c. 247, 38 Stat. 686, 687 (Comp. St. § 4713d), which provides that no increase in construction charges shall be made after the same have been fixed, ex cept by agreement between the Secretary of the Interior and a majority of the water right applicants and entrymen to be affected thereby. It was insisted, further, that appellant would be precluded by state law from collecting the charges from owners of nonproject lands, because they were not benefited. The government having threatened that, unless the charges were paid, it would shut off *53 the supply of water from the project lands within the district, appellant brought this suit to enjoin such action. The federal District Court dismissed the bill (283 F. 569), and its decree was affirmed by the Circuit Court of Appeals (288 F. 541). Both courts held that the cost was a proper charge as *54 but, when the irrigation system is completed, expenditures made to maintain it, as an efficient going concern, and to operate it effectively to the end for which it was designed are, at least generally, maintenance and operating expenses. The expenditure in question was not for extensions to new lands, or for changes in or additions to the system made necessary by faulty original construction in violation of contractual or statutory obligations (Twin Falls Co. v. Caldwell [C. C. A.] 272 F. 356, 369; Id., *266 U. S. 85, 45 S. Ct. 22, 69 L. Ed. ), but was for the purpose of overcoming injurious consequences arising from the normal and ordinary operation of the completed plant which, so far as appears, was itself well constructed. The fact that the need of drainage for the district lands, already existing or foreseen, had been supplied, and the cost thereof charged to all the water users as a part of the original construction, by no means compels the conclusion that an expenditure of the same character, the necessity for which subsequently developed as an incident of operation, is not a proper operating charge. The same kind of work under one set of facts may be chargeable to construction and under a different set of facts may be chargeable to maintenance and operation. See Schmidt v. Louisville, C. & L. Ry. Co., 119 Ky. 287, 301, 302, 84 S. W. 314. For example, headgates originally placed are charged properly to construction; but it does not follow that, if an original headgate be swept away, its replace (45 S.Ct.) 310-Owner of half interest in mine necessary party to other owner's suit to cancel lease. ment, though requiring exactly the same kind | 2. Courts [2] Appellant says the lands within the district are not benefited by the drainage in question, and if a direct and immediate benefit be meant, that is quite true. But it is not necessary that each expenditure for maintenance or operation considered by itself shall directly benefit every water user, in order that he may be called upon to pay his proportionate part of the cost. If the expenditure of to-day does not especially benefit him, that of yesterday has done so, or that of to-morrow will do so. The irrigation system is a unit, to be, and intended to be, operated and maintained by the use of a common fund, to which all the lands under the system are required to contribute ratably, without regard to benefits specifically and directly received from each detail to which the fund is from time to time devoted. This conclusion, we think, fairly accords with the principle established by the Su *55 preme Court of the state in *Colburn v. Wilson, 24 Idaho, 94, 104, 132 P. 579, and we see no merit in the contention that under the state law a ratable part of the cost of this drainage cannot be assessed by the district upon the project lands within its limits because they are not benefited thereby. The cost of draining the district project lands was met by a charge imposed in part and proportionately upon the lands in the project outside the district. If now, when the latter need like protection, the district lands are called upon to assume an equivalent obligation, it requires no stretch of the realities to see, following from such an equitable adjustment, a benefit on the whole shared by both classes of lands alike. But in any event, since we find that the expenditure in question properly is chargeable to operation and maintenance, appellant is liable under the express terms of its contract. Decree affirmed. (267 U. S. 542) Owner of a one-half interest in mine is necessary party to other owner's suit against lessee to cancel lease on the ground of fraud, for purpose of determining whether federal court has jurisdiction because of diversity of citizenship. 3. Courts 308-Suit by owner of half interest in mine, to cancel lease against lessee and owner of other half interest, held not within jurisdiction of federal court because of diversity of citizenship. Suit by owner of half interest in mine against lessee and owner of other half interest to cancel lease on ground of fraud held not within jurisdiction of federal court on ground of diversity of citizenship, where lessee was half interest was resident, since defendant corporation of state of which owner of other owner belongs on same side of controversy as plaintiff owner, and must be so considered in determining whether diversity of citizenship gives federal court jurisdiction. Appeal from the District Court of the United States for the Southern District of New York. Bill by John Alden Lee against the Lehigh Valley Coal Company and another. Decree of dismissal, and complainant appeals. Affirmed. cott, both of New York City, for appellant. Messrs. H. M. Hitchings and Frank WolMr. Charles W. Pierson, of New York City, for appellees. Mr. Justice HOLMES delivered the opinion of the Court. This is a bill brought against the Lehigh Valley Coal Company, lessee of a coal mine, by John Alden Lee who owns one-half of the mine in his own right and as trustee for his brother. Kate P. Dixon owns the other half. The bill seeks a construction of the lease and of an agreement made on behalf of the plaintiff's interest on January 21, 1913; a declaration that certain parts of the agreement are a fraud upon the plaintiff and Kate P. Dixon; an account to the plaintiff and Kate P. Dixon from the Coal Company, and that the lease may be declared to be and *543 LEE v. LEHIGH VALLEY COAL CO. et al. to have been since (Argued and Submitted Jan. 22, 1925. Decided April 13, 1925.) No. 222. 1. Removal of causes 31-Suit may be removed to federal court at instance of defendant, if codefendant is not necessary party. Suit may be removed from state court to federal court at instance of a defendant, if codefendant, made party by plaintiff, is not a necessary party. January 21, 1913, in *full force and effect. The Coal Company is a corporation of Pennsylvania, the plaintiff Lee a citizen and resident of New York, and Kate P. Dixon is a citizen and resident of Pennsylvania. She is made a defendant, the bill alleges, because of her refusal to be made a plaintiff "and because to make her such party plaintiff would oust the Court of jurisdiction." The bill was dismissed for want of jurisdiction by the District Court, we presume on the ground that so far as appeared the arrangement of the parties was For other cases see same topic and KEY-NUMLER in all Key-Numbered Digests and Indexes 45 S.CT.-25 merely a contrivance for the purpose of ers, petitioners, to review a judgment of the founding a jurisdiction that otherwise would Circuit Court of Appeals (290 F. 160), reversnot exist. Dawson v. Columbia Avenue Sav-ing an order of the District Court (283 F. ing Fund, Safe Deposit, Title & Trust Co., 351), respecting claims of the United States 197 U. S. 178, 181, 25 S. Ct. 420, 49 L. Ed. and the City and County of San Francisco. 713. Affirmed and remanded. [1-3] The plaintiff and appellant now argues that Kate P. Dixon is not a necessary party. When a defendant seeks to remove a suit from a State Court to the District Court, of course he is entitled to contend that a party joined by the plaintiff is not a necessary party and therefore does not make the removal impossible by defeating the jurisdiction. Salem Trust Co. v Manufacturers' Finance Co., 264 U. S. 182, 44 S. Ct. 266, 68 L. Ed. 628, 31 A. L. R. 867. It is a different question whether the plaintiff can repudiate the effect of his own joinder, can retain a party to the relief sought and yet keep him on the wrong side in order to avoid the effect of his own act. Without inquiring whether the plaintiff could have maintained the suit alone had he so elected and had he found it impossible to join Kate P. Dixon, obviously she was a "necessary" even if not an indispensable party. Shields v. Barrow, 17 How. 130, 139, 15 L. Ed. 158. It would be hard upon the Coal Company to compel it to submit to an adjudication upon the lease, upon a fraud alleged to have been committed against both owners, and to an account, in the absence of one of the lessors. The joinder of both is much more than a mere form. As both are named they must be arranged upon the side on which they long. Menefee v. Frost (C. C.) 123 F. 633. Blacklock v. Small, 127 U. S. 96, 8 S. Ct. 1096, 32 L. Ed. 70. Decree affirmed. (268 U. S. 1) Mr. Louis V. Crowley, of San Francisco, Cal., for petitioners. The Attorney General and Messrs. James M. Beck, Sol. Gen., of Washington, D. C., and Merrill E. Otis, of St. Joseph, Mo., for respondents. Mr. Justice McREYNOLDS delivered the opinion of the Court. *2 The bankrupt's estate consisted of personal property only, and there is no suggestion of a lien thereon to se*cure any of the claims now under consideration. The fund derived from conversion of all the property is insuffiStates and the city and county of San Francient fully to satisfy taxes due the United cisco, and the allowed claims for preferred wages. Which of these must be paid first is the question for decision. The referee ruled 563, c. 541 (Comp. St. § 9648), provides: "Sec. 64. Debts Which Have Priority.-a. The court shall order the trustee to pay all taxes legally due and owing by the bankrupt to the United States, state, county, district, or municbe-ipality in advance of the payment of dividends to creditors, and upon filing the receipts of the proper public officers for such payment he shall be credited with the amount thereof, and in case any question arises as to the amount or legality of any such tax the same shall be heard and determined by the court. OLIVER et al. v. UNITED STATES et al. In re WEST COAST RUBBER CORPORA TION. "b. The debts to have priority, except as herein provided, and to be paid in full out of bankrupt estates, and the order of payment shall be (1) the actual and necessary cost of preserving the estate subsequent to filing the petition; (2) the filing fees paid by creditors (Submitted March 2, 1925. Decided April 13, in involuntary cases; (3) the cost of adminis 1925.) No. 180. Bankruptcy 346 - Claims for taxes entitled to payment ahead of claims for wages, except when subordinated by some relevant law. Under Bankruptcy Act, § 64a (Comp. St. § 9648), claims for taxes are entitled to payment ahead of preferred claims for wages under section 64b (4), unless particular tax has been subordinated to such claims by some relevant state or federal law. On Writ of Certiorari to the United States Circuit Court of Appeals for the Ninth Circuit. In matter of the West Coast Rubber Corporation, bankrupt. On writ of certiorari by A. J. Oliver, trustee in bankruptcy, and oth tration, including the fees and mileage payable to witnesses as now or hereafter provided by the laws of the United States, and one reasonable attorney's fee, for the professional services actually rendered, irrespective of the number of attorneys employed, to the petitioning creditors in involuntary cases, to the bankrupt in involuntary cases while performing the duties herein prescribed, and to the bankrupt in volundue to workmen, clerks, or servants which have tary cases, as the court may allow; (4) wages. been earned within three months before the #3 date of the com*mencement of proceedings, not to exceed three hundred dollars to each claimant; and (5) debts owing to any person who by the laws of the states or the United States is entitled to priority." Guarantee Co. v. Title Guaranty Co., 224 U. S. 152, 159, 160, 32 S. Ct. 457, 459 (56 L. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes |