128 F. 302 | U.S. Circuit Court for the Northern District of Illnois | 1904
One Friederick Kolze, who was the owner o.f certain lots in Cook county, Ill., sold the same to a man .named Day through the agency of one Stade, his nephew, and took back as part -of the- purchase price nine notes for $6oo each, secured by deed of trust upon said lots, in groups, viz., three groups of notes, each group including three of said notes, due respectively in one, two, and -three years from November 17, 1897, secured by a. separate deed of trust dated November 17, 1897, and acknowledged November 23, 1897, on a third of said lotes, or $1,800 in each incum-brance. Some time afterwards Stade caused Day to execute and deliver to him duplicates of said notes, or at least secured from Day copies thereof. The notes were executed by Day to the order of himself, and by him indorsed and delivered to Kolze, or to Stade for Kolzé.' Stade then took one set of the notes, and deposited them in the safety deposit box for Kolze, and proceeded to negotiate the other set. He placed the nine notes aforesaid on February 17, 1898,
Complainant, a citizen of Massachusetts, filed her three bills on May 29, 1899, i° foreclose said three trust deeds. These suits were consolidated, and the cause was referred to the master, who found the issues for the complainant. Afterwards, and on exceptions to the master's report, the same were overruled, and the report confirmed. 'i'he matter comes on now to he heard upon the motion of defendants to dismiss the cause for want of jurisdiction, on the ground that Kolze and Day were both citizens and residents of this district at the time of the said transactions, and complainant, claiming as assignee of said notes, cannot maintain her suit here under clause t of the acts of 1887 and 1888 (Acts March 3, 1887, c. 373, 24 Stat. 552, and Aug. 13, 1888, c. 866, 25 Stat. 433 [U. S. Comp. St. 1901, p. 508], in regard to jurisdiction of federal courts, which provide that neither the Circuit nor District Courts of the United Slates shall have jurisdiction “of any suit, except in foreign bills of exchange to recover the contents of any promissory note or other chose in action in favor of any assignee or of any subsequent holder, if such instrument he payable to bearer and be not made by any corporation, unless such suit might have been prosecuted in such court to recover the said contents, if no assignment or transfer had been made.” Some attempt is made by complainant to show that this is not a suit for the collection of the contents of the notes. It is a suit to foreclose the trust deeds. The other relief sought is incidental to that end, and so must be held to be a suit to collect the money due on the notes. Shoecraft v. Bloxham, 124 U. S. 730, 8 Sup. Ct. 686, 31 L. Ed. 574; Laird v. Indemnity Mut Marine Assurance Co. (C. C.) 44 Fed. 712; Mexican National R. R. Co. v. Davidson, 157 U. S. 206, 15 Sup. Ct. 563, 39 L. Ed. 672. This being so, could Hoadley maintain this suit in this court, both Day and Kolze being citizens of Illinois? The courts have' held in analogous cases that the act above set out would divest this
Restating the facts in this case, we find that the notes were indorsed in blank; that on the day they were executed and delivered —November 23, 1897 — the maker, Day, reconveyed the real estate on which they were secured, and which constituted the consideration for them, to the payee, Kolze, who had remained in possession of the laud. On October 27, 1898, the trust deeds securing said notes were released, and the notes of Day (not the genuine notes, however, for the purposes of this proceeding) canceled. The notes in suit were on February 17, 1898, put up as collateral to the $1,000 note made by Stade. April 21, 1899, complainant, who was guarantor of said $1,000 note, bought the said collateral, being the nine notes in suit. No question is now before the court as to the validity of her title thereby acquired. Thus at the time this suit was begun, Kolze was the owner of the land. It must be borne in mind that the notes in suit were used as collateral by Stade, Kobe’s trusted agent, and that, for the purposes of this proceeding are to be dealt with as though Kolze himself had put them up as collateral. If this be so, then the transaction was between Kolze and complainant’s assignor. The fact that the notes were placed as collateral to Stadc’s note for $1,000, upon which note complainant was an indorser or guarantor, would give complainant the right to be protected to the extent of her liability as indorser, so that under the circumstances of the case her title to the note should vest as of the date when the notes were put up as collateral. This being so, the deal was between her and Kolze.
Under the decisions above quoted, I am of the opinion that the circumstances of this case give jurisdiction to this court to entertain the cause. The subsequent conveyances of the lots could have no effect upon complainant’s right to have the release set aside, since it was obtained in fraud.