A citizen of New York, a stockholder in a Massachusetts corporation, filed a bill against it, its directors, another corporation, and the City of Boston, alleging that the State Legislature and the City of Boston had attempted to repeal its charter and to grant its property to the other corporation; that its directors had refused to bring any action in the State Courts, and that he was remediless except in equity. The Supreme Court held that this bill presented "so strong a case of the total destruction of the corporate existence, and of the annihilation of all corporate powers" that "we think complainant as a stockholder comes within the rule laid down in" Hawes vs. Oakland, "which authorizes a shareholder to maintain a suit to prevent such a disaster, where the corporation peremptorily refuses to move in the matter."3

On the other hand, when the officers of the corporation are in fact in sympathy with the stockholder, the Federal Courts will re-align the parties so as to put the plaintiff and the corporation on the same side, and by so doing will usually oust their jurisdiction.

289. Do.-Equity Rule 27.-In Hawes vs. Oakland (supra) certain rules to prevent collusive suits of this character were laid down. They are now substantially embodied in Equity Rule 27, which provides that every bill brought by a stockholder in a corporation against the corporation and other parties, founded on rights which may properly be asserted by the corporation, must be verified by oath and must contain an allegation that the plaintiff was a shareholder at the time of the transaction of which he complains, or that his share had devolved on him since by operation of law, and that the suit is not a collusive one to confer on a Court of the United States jurisdiction of a case of which it would not otherwise have cognizance. The bill must also set forth with particularity the efforts of the plaintiff to secure such action as he desires on the part of the managing directors or trustees, and if necessary, of the shareholders, and the causes of his failure

'Greenwood vs. Fruit Co. 105 U. S. 16.

to obtain such action, or the reasons for not making such effort. Most of the requirements of this rule speak for themselves.

A corporation has some controversy with the municipality in which it is doing business. All the stockholders are citi- * zens of the same State, or if there are any who reside elsewhere they are not willing to bring suit. It is highly inexpedient that it shall be in the power of some resident of another State to buy a few shares of stock in the corporation for the very purpose of promoting litigation.

290. Do.-Removal to Federal Courts Cannot Be Prevented by False Alignment of Parties by State Court Plaintiff. The plaintiff, instead of desiring to bring his case in a Federal Court, may wish to keep it out of that Court, and to defeat the right of removal thereto which may sometimes be exercised by a defendant. Under such circumstances he may in the State Court unite as a defendant one who is a citizen of the same State with himself.

A Kansas mortgagor wished to contest the validity of a mortgage previously made by him to a Missouri corporation. He had strong reasons to wish that the litigation should be carried on in the State and not in the Federal Courts. He accordingly made a new or second mortgage to another citizen of Kansas. The debt secured by this second mortgage was made payable in ten days. At the end of that time the second mortgagee filed in the State Court a bill to foreclose and for other relief against the mortgagor and the first mortgagee. The relief asked against the latter was a declaration of the invalidity of its mortgage.

It will be perceived that as the holder of the second mortgage was the plaintiff and the mortgagor was a defendant, there was a citizen of Kansas on each side of the record. The first mortgagee sought to remove the case to the Federal Court. The Circuit Court of Appeals for the Eighth Circuit held that the cause was removable. In the real controversy

the mortgagor and the second mortgagee were on one and the same side, the first mortgagee on the other.1

291. When Objection to the Jurisdiction Should Be Taken. While, the objection that there is no jurisdiction may be raised at any time by the Court itself, if one of the parties wishes to make it he should do so as early in the proceedings as he has notice of the facts upon which it is supposed to rest. Delay in making the objection will, if the existence of those facts is in doubt, weigh in the mind of the Court against sustaining it.

292. Necessary Allegations in Suits by Assignees.— In suits in the Federal Court by an assignee upon a chose in action, it is necessary that the declaration or complaint shall set forth, on its face, such facts as will show affirmatively that the Court would have had jurisdiction of the suit had no assignment been made.1

1

'Boatmen's Bank vs. Fritzlen, 135 Fed. 650.

Turner vs. Bank of North America, 4 Dallas, 8.

CHAPTER XI.

REMOVAL OF CASES FROM STATE TO FEDERAL COURTS.

293. Introductory.—The jurisdiction given to the District Courts by section 24 of the Judicial Code is for the greater part not exclusive, but is concurrent with the Courts of the States; that is to say, the plaintiff has the option of bringing his suit either in a State or in a Federal Court.

294. Why Removal is Permitted.-A defendant may be as much exposed to the dangers of local prejudice as a plaintiff. He may be as much interested in setting up the Federal view of some right claimed under the Constitution and laws of the United States. If he is compelled to remain in the Court into which the plaintiff brought him, he has no such choice between the State and the Federal tribunals as was exercised by his adversary. If opportunity is afforded him of removing to a Court of the United States, cases in which Federal questions are involved, or in which diversity of citizenship exists, he will stand on an equal footing with his opponent.

In some cases removal statutes give him this option; in others, in which it would seem to be as necessary to the protection of his interests, it is withheld, either because of the manifest intent of the law-makers or because of the somewhat narrow construction the Courts have put upon the language of the statutes.

There are sound reasons for carefully restricting the jurisdiction which may be exercised by the Federal Courts over litigation between individuals. It is to be regretted that many of the limitations imposed are of so arbitrary a character. This is especially true with reference to those which

Chap. V, supra.

hedge about the right of removal from State to Federal tribunals.

Whether a case is or is not removable, often depends upon incidental or accidental circumstances having little discov erable bearing upon anything of real moment.

295. Rules Regulating Removals-Ordinarily No Suit Can Be Removed Unless it Could Have Been Brought Originally in the District Court.-The statutory provisions governing removals of cases from State to Federal Courts will be found in sections 28 to 39, both inclusive, of the Judicial Code. Section 28 provides that "any suit of a civil nature, at law or in equity, arising under the Constitution or laws of the United States, or treaties made, or which shall be made, under their authority, of which the District Courts of the United States are given original jurisdiction by this title *** brought in any State Court, may be removed by the defendant or defendants therein to the District Court of the United States for the proper district."

Under this provision no suit can be removed unless it might have been brought in the District Court in the first instance.

296. Right of Removal Because Federal Question Involved-Existence of Such Question Must Be Shown By Plaintiff's Statement of His Own Case.-Where jurisdiction is based on the existence of a Federal question the right of removal does not in anywise depend on diversity of citizenship. Such a suit may be brought in the District Court, although all the parties to it are citizens of the same State. The District Court has no jurisdiction on the ground that there is a Federal question involved, unless the plaintiff's statement of his own case raises it.1 It is not sufficient for him to allege what the defendant's defense will be. The Courts have held that it follows that where the plaintiff's declaration or bill does not disclose the existence of a Federal

1 Sec. 174, supra.