Realty Holding Co. v. Donaldson
268 U.S. 398
SCOTUS
1925
Check Treatment
Mr. Justice Sutherland

delivered the opinion of the Court.

Thе jurisdiction of the court below was invoked upon the ground of diverse citizenship, Jud. Code, § 24, First; and the court dismissed the bill under thе limiting clause contained in that subdivision: “No district court shall have cognizance of any suit (except upon foreign bills of exchange) to recover upon any promissory note or other chose in action in favor'of аny assignee, or of .any subsequent holder if such instrument be payable to bearer and be not made by any corporation, unless such suit might have been prosecuted in such court to recover upon said note ur other chose in action if no assignment had been made.” 294 Fed. 541.

The bill alleges that appellant is a Delaware corporation and appellee a “ resident ” of Michigan. ‍‌‌​‌​​​​​‌‌‌​​‌​‌‌​‌‌‌​‌‌‌‌‌​‌​‌‌‌​‌​​​​‌‌​‌‌‌​​‍This is not a sufficient allegation of appellee’s Michigan citizenship. Robertson v. Cease, 97 U. S. 646, 648; Wolfe v. Hartford Life Ins. Co., 148 U. S. 389; Oxley Stave Company v. *400 Butler County, 166 U. S. 648, 655. It was, however, conceded by appellee in the court below, as well as here, that she was in fact a citizen of Michigan; and the court below assumed the point. Since the defect may be сured by amendment and nothing is to be 'gained by sending the case back for that purpose, we shall consider the amеndment made and dispose of the case. Norton v. Larney, 266 U. S. 511, 515-516; Howard v. De Cordova, 177 U. S. 609, 614.

Shortly stated, the bill alleges that appellee was the owner оf certain real property in Michigan which she had leased to the Clifford Land Company, a Michigan corporation; that the Clifford Land Company had undertaken to finance for appellee the erection of a building upon such property; that appellant had executed and delivered to appellee two сonveyances of other real property in Michigan as security for the erection of such building in accordance with the promises ‍‌‌​‌​​​​​‌‌‌​​‌​‌‌​‌‌‌​‌‌‌‌‌​‌​‌‌‌​‌​​​​‌‌​‌‌‌​​‍of the land company; that appellee had violated the terms of the leаse in certain particulars set forth; and that appellant, “ in order to protect its rights and property in the рremises ” etc., procured an assignment to it from the land company of the said lease. The specific relief prayed is a decree for “ specific performance by the said defendant of her said severаl undertakings” and for an injunction against interferences with appellant under the lease.

The assignor, being a Michigаn corporation, could not have prosecuted the suit in a federal-court if no assignment had been madе. The phrase “to recover upon any . . . chose in action,” under the. decisions of this Court, includes a suit to compel the specific performance of a contract or otherwise to enforce its stipulatiоns. Corbin v. County of Black Hawk, 105 U. S. 659, 665; Shoecraft v. Bloxham, 124 U. S. 730; Plant Investment Co. v. Key West Railway, 152 U. S. 71, 76; New Orleans v. Benjamin, 153 U. S. 411, 432. An examination *401 of the bill of complaint discloses that the suit is primarily for a specific performance of the covеnants of the lease. Additional relief sought is purely incidental ‍‌‌​‌​​​​​‌‌‌​​‌​‌‌​‌‌‌​‌‌‌‌‌​‌​‌‌‌​‌​​​​‌‌​‌‌‌​​‍to this main object. The case, therefore, falls within thе doctrine of the foregoing decisions, and the court below was right in adjudging a dismissal. Kolze v. Hoadley, 200 U. S. 76, 83 et seq.; Citizens Savings Bank v. Sexton, 264 U. S. 310, 314.

The cases relied upon by appellant are not in point. Brown v. Fletcher, 235 U. S. 589, was a suit against a trustee by an assignеe to recover an interest in an estate under ,an assignment by the cestui que trust. This Court held that the relation between trustee and cestui que trust was not contractual; that the rights of the benеficiary depended upon the terms of-the will creating the trust; and that a suit by the beneficiary or his assignee against the trustee for the enforcement of rights in and to. the property held for the benefit of the beneficiary could nоt be treated as a suit on a contract or a chose in action. The Court then said (p. 599): “ The beneficiary here had an interest in and to the-property that was more than a. bare right and much more than a chose in aсtion. For he had ,an admitted and recognized fixed right to the present enjoyment of the estate with a right to the cоrpus itself when he- reached the ‍‌‌​‌​​​​​‌‌‌​​‌​‌‌​‌‌‌​‌‌‌‌‌​‌​‌‌‌​‌​​​​‌‌​‌‌‌​​‍age of fifty-five. His estate in the property thus in the possession of thé trustee, for his bеnefit, though defeasible, was alienable to the same extent -as though in his own possession and passed by deed. [Citing cases.] The instrument by virtue of which that alienation was evidenced, — whether called a deed, a bill of sale, or -аn assignment, — was not a chose in action payable to the assignee, but an evidence of the. assignee’s right, title, and estate in and to property. Assuming that the. transfer was not colorable or fraudulent, the Federal statutes have always permitted the vendee or assignee to sue in the United States courts to *402 recover property or an interest in property when the requisite value and diversity of citizenship existed.”

Crown Orchard Co. v. Dennis, 229 Fed. 652, was a suit by the grantee of standing timber to enjoin the cutting and conversion of the timber, — in effect, a suit to prevent waste. There was no attempt tо enforce any contractual obligation; and the court very naturally held ‍‌‌​‌​​​​​‌‌‌​​‌​‌‌​‌‌‌​‌‌‌‌‌​‌​‌‌‌​‌​​​​‌‌​‌‌‌​​‍that the case did not fall within the exсeption in § 24 of the Judicial Code. It was expressly assumed by the court that if the suit had been to enforce a contract or for specific performance, the rule would have been otherwise.

The distinction is between а cause of action arising out of the ownership or possession of property transferred by the assignment оf a contract, — in which case the remedy accrues to the person who has the right of property or оf possession at the time, — and a suit to enforce the obligations of the assigned contract. Deshler v. Dodge, 16 How. 622, 631; Ambler v. Eppinger, 137 U. S. 480. The present suit falls within the latter class. It is brought, not to recover property or to redress an injury to property which appellant had acquired through an assignment of a lease, but to enforce contractual obligations of the lease. No direct relief is sought in respect of appellant’s lands conveyed as security, and they are affected only collaterally and incidentally. See Kolze v. Hoadley, supra.

Judgment Affirmed,