delivered the opinion of the Court.
On May 16, 1919, the Nelson Blower & Furnace Company, a Massachusetts corporation, assigned to the petitioner for a valuable consideration indebtedness to the amount of $45,000 due or to become due to the Nelson Company from the Murray & Tregurtha Corporation, under a contract whereby the Nelson Company was to construct certain engines for the latter. July 15, 1919, *188 the Nelson Company for a valid consideration assigned to the respondent, Manufacturers’ Finance Company, the same indebtedness to the amount of $40,000, and on September 20 made another assignment to the Finance Company of the same indebtedness to the amount of $10,000. Later, about the last mentioned date, the Finance Company notified the debtor of its assignment. Up to that time it had made no inquiry of the debtor as to its indebtedness to the Nelson Company, and neither it nor the debtor had any knowledge of the prior assignment to the petitioner. September 26, 1919, the United States District Court in a suit in equity appointed a receiver of the Nelson Company. About that time each assignee learned of the assignment to the other. October 6, 1919, petitioner and respondent Finance Company agreed that the Nelson Company, acting by its receiver, should finish the work being done for the debtor, and that the net proceeds, which amounted to $7,963.36, a sum less than the amount of the claim of either assignee, should be deposited with the respondent International Trust Company, a Massachusetts corporation, in a special account in the name of the Finance Company as trustee for the one or the other of such assignees thereafter to be agreed by them, or found by some court of competent jurisdiction, to be entitled thereto. They failed to agree, and petitioner brought a bill in equity in the state court against the respondents to establish its right to the amount so on deposit, and to have the same paid to it. For the removal of the suit to the District Court of the United States, the Finance Company filed its petition stating that the International Trust Company is not a necessary party to the suit but is a mere nominal party, being only a stakeholder and without any interest whatever in the result, and that the controversy in the suit is entirely between citizens of different States, Salem Trust Company, a Massachusetts corporation, and the Manufacturers’ Finance *189 Company, a Delaware corporation. Other proper steps were taken, and the case was removed from the state to the federal court. Petitioner moved to remand, asserting that the International Trust Company is a necessary party to the suit, and that the case was improperly removed, because the plaintiff and one of the defendants are citizens of the same State. The motion was denied. The case was tried in the District Court and dismissed on final decree which was affirmed by the Circuit Court of Appeals.
There are two questions for decision: Did the District Court have jurisdiction? Which of the parties is entitled to the fund?
The District Courts have original jurisdiction of controversies between citizens of different States (Constitution, Art. Ill, § 2; Judicial Code, § 24); and when in any suit brought in a state court; there is a controversy, which is wholly between citizens of different States, and which can be fully determined as between them, a defendant interested in such controversy may remove the suit to the proper District Court of the United States. Judicial Code, § 28. District Courts have jurisdiction if all the parties on the one side are of citizenship diverse to those on the other side.
1
Jurisdiction cannot be defeated by joining formal or unnecessary parties.
2
The right of removal depends upon the case disclosed by the pleadings when the petition therefor is filed,
(Barney
v.
Latham,
*190
As between successive assignees of the same account receivable, does prior notice to the debtor of the later assignment without more subordinate the rights of the earlier to those of the later assignee?
*191 There is a conflict of authority on the question. Under decisions of the Supreme Judicial Court of Massachusetts, which are in harmony with the decisions of the highest courts in a number of the States, 3 the earlier assignee would prevail. The courts below held the question to be one of general jurisprudence, declined to be bound by the Massachusetts decisions, and followed what they understood the rule to be, as applied by this and other federal courts, 4 and in a number of the States, 5 and decided that the later assignee, the first to give notice to the debtor, is entitled to> the money.
The question is one of general law, not based on any legislation of the State or local law or usage, and the
*192
lower court rightly decided that it was not bound by the rule applied in the decisions of the highest court of Massachusetts.
Swift
v.
Tyson,
The precise question now before us was not involved, and therefore was not decided, in any of the decisions of this Court cited by the Circuit Court of Appeals.
In
Judson
v.
Corcoran,
Judson took his assignment in 1845 and first produced it in 1851. In the meantime, Corcoran got his assignment, gave notice, and prosecuted it to final award. It was held that he was entitled to the fund. Clearly that case does not hold that mere priority of notice by a later assignee will subordinate the rights of the first purchaser.
In
Spain
v.
Hamilton’s Administrator,
In its decision, this Court referred to Spain’s negligence and delay. It adverted to the rule that the assignee is entitled to the remedies of the assignor and is subject to all the equities between him and his debtor, and said: (p. 624) “But in order to perfect his title against the debtor it is indispensable that the assignee should immediately give notice of the assignment to the debtor, for otherwise a priority of right may be obtained by a subsequent assignee, or the debt may be discharged by a payment to the assignee [assignor] before such notice.”
If a debtor pays, or becomes bound to pay, a later assignee, he is not liable to an earlier assignee who failed to give him notice of his assignment. And if, without notice of any assignment, he pays the assignor he cannot be held by the assignee. To safeguard against such things, it is necessary for an assignee to give the debtor notice of his assignment. But it does not follow that mere priority of notice of the later assignee, who took nothing by his assignment, will subordinate the rights of an earlier assignee. That case does not establish or apply the rule contended for by respondent.
In
Laclede Bank
v.
Schuler,
The doctrine that mere priority of notice to trustee or debtor gives priority of right to a later assignee over an *195 earlier assignee of a- chose in action is generally referred to Dearie v. Hall and Loveridge v. Cooper, 3 Russell, 1, decided at the same time and upon the same principle. The leading case is Dearie v. Hall. In that case, there was much more in favor of the second assignee than mere priority of notice. Brown, cestui que trust under his father’s will, made three assignments of income payable to him during his life by the executors. The two earlier assignments were made to Dearie and Sherring, respectively. Each was for a part of the annual income. By the terms of the assignments the assignor was permitted- to continue to collect, and for years he did collect, the income assigned. No notice of the earlier assignments was given to the executors. Before he purchased, Hall, the latest assignee, diligently inquired of the trustees as to Brown’s title and the amount of income paid him. The trustees knew of no assignments, and without any suspicion of prior incum-brance, Hall in good faith purchased the entire claim. He gave immediate notice of his assignment to the trustees and received assurance that the income would be paid to him. When it became due, an installment was paid to him. Thereafter, the earlier assignees gave notice and demanded payment under their respective assignments. The trustees withheld ail payments. Suit was brought by Dearie and Sherring against Hall to establish priority of their assignments over his. In the lower court, Sir Thomas Plumer, M. R., gave judgment in favor of Hall, and it was affirmed by Lord Lyndhurst, L. C. Two grounds of the decision may be gathered from the opinions: (1) That the negligence of the prior assignees in failing to give notice to the trustees resulted in Hall being induced to purchase without knowledge of the prior assignments. (2) That notice to the trustees was necessary to perfect title, — as, “ the act of giving the trustee notice is in a certain degree taking possession of the fund.” (See Ward v. Duncombe, L. R. A. C. [1893] 369, 387.) These cases *196 did not decide that notice by a subsequent assignee after his purchase, without any inquiry in advance of his purchase, will subordinate the title of the prior assignor to that of the later. No such questions were involved. But later, in the case of Foster v. Cockerell, in the House of Lords, 3 Cl. & F. 456, that question was decided in favor of the subsequent assignee, and it appears to have become the settled rule in England. However, it has been the subject of much discussion and explanation by the English courts. See Wilmot v. Pike, 5 Hare, 14; Ward v. Buncombe, supra. It appears that in 1814 in Cooper v. Fynmore, 3 Russell, 60, Sir Thomas Plumer, Y. C., himself decided that mere neglect of notice was not sufficient to postpone the first assignee, and held (p. 64): “ In order to deprive him of his priority, it was necessary that there should be such laches as, in a court of equity, amounted to fraud.” In 1827, Dearie v. Hall and Love-ridge v. Cooper were decided. In 1833, Lord Lyndhurst, then Chief Baron, in Smith v. Smith, 2 Cr. & M. 231, in the Court of Exchequer, held that the second assignee in order to obtain priority must show that he exercised proper caution in taking the assignment, and that he had applied to the trustees to- know if any previous, assignment had been made, and that, unless he so applied to each of the trustees, he would not have exercised due caution or done all that he ought to have done. Lord Herschell, in Ward v. Duncombe, supra, said (p. 380): “ The language thus used by the Chief Baron is somewhat remarkable. It would seem, if correctly reported, to indicate the view that a second incumbrancer would only obtain priority over an earlier one if he had used due caution, and had, in fact, made such inquiry as a prudent man would of each of the trustees. This view is in direct conflict with the decision of this House two years later in Foster v. Cockerell in which Lord Lyndhurst himself delivered the leading opinion.” Undoubtedly the first application of *197 the rule that mere priority of notice gives priority of right was in Foster v. Cockerell, but it is always referred to Dearle v. Hall and Loveridge v. Cooper. In Ward v Buncombe, the earlier decisions by which the rule was established were discussed by Lord Herschell and Lord Mac-naghten. The opinions leave the impression that the rule itself was not deemed to be wholly satisfactory, and that it is not very clear upon what principle it rests. Ward v. Buncombe, supra, 391.
There is no decision of this Court which sustains the contention that, as between successive assignees of the same chose in action, mere priority of notice gives priority of right. It seems to us that the better reasons are against such a rule. By the first assignment, the rights of the assignor pass to the assignee. The creditor has a right to dispose of his own property as he chooses and to require the debt to be paid as he directs, without the assent of the debtor. See Story, Equity Jurisprudence, 11th ech, § 1057. Notice of the assignment to the debtor adds nothing to the right or title transferred. A subsequent assignee takes nothing by his assignment, because the assignor has nothing to give. See Judson v. Corcoran, supra, 614. If, after assignment, the assignor receives payment from the debtor, he is liable to the assignee. Failure of the first assignee to give notice does not divest him of any title or right or vest any claim in a subsequent purchaser. It cannot injuriously affect an intending- purchaser who makes no inquiry of the debtor concerning the assignor's title. The debtor is not bound to answer inquiries concerning the assignor’s title, and there can be no assurance that an intending purchaser can ascertain the incumbrance by inquiry of the debtor having notice of the earlier assignment. Low v. Bouverie, (1891) L. R. 3 Ch. 82, 99. Compare Ward v. Duncombe, supra, 393. It is impossible to eliminate all risk from such a transaction. If the second assignee elects to rely on the *198 representations of the vendor as to his title, and is deceived, he cannot shift his loss to the first assignee, unless some act or omission of the latter was proximate to the deception.
Facts and circumstances may create an equitable estop-pel against the first assignee.
Herman
v.
Mutual Life Insurance Co.,
In a case where, as here, the later assignee has made no inquiry of the debtor in advance of talcing his assignment, there is no analogy between the giving of notice by the *199 first assignee to the debtor and the taking of possession of tangible personal property by a purchaser. It is impossible in any real sense to transfer possession of accounts receivable or the like, and, as to them, an assignee does not become clothed with the indicia of ownership as does one taking possession of tangible things. It is not accurate to say that notice is necessary to perfect title in the assignee of a chose in action. While failure to give notice may become an important element in a situation from which equitable estoppel may arise against the first assignee, it cannot be said to be necessary to or an element in acquisition of. title.
The result will be the same if it be assumed that each bona fide purchaser takes merely an equity in the chose in action assigned. If equities are equal, the first in time is best in right. Otherwise the stronger equity will prevail. While there are contingencies which entitle the second to prevail over the first assignee, 7 we hold that mere priority of notice to the debtor by a second assignee, who lent his money to the assignor without making any inquiry of the *200 debtor, is not sufficient to subordinate the first assignment to the second. The petitioner is entitled to the fund.
Decree reversed.
Notes
Raphael
v.
Trask,
Wormley
v.
Wormley,
Putnam v. Story,
Judson
v.
Corcoran,
Graham Paper Co.
v.
Pembroke,
In Ward v. Duncombe, Lord Macnaghten said (p. 391):
“ The general principle applicable to all equitable titles is, I think, well expressed by Lord Cairns in Shropshire Union Railways and Canal Company v. The Queen (L. R. 7 E. & I. at p. 506): ‘A preexisting equitable title/ said Lord Cairns, 'may be defeated by a supervening legal title obtained by transfer ’ — he was there speaking of an equitable title to shares. Then he goes on: ‘And I agree with what has been contended, that it may also be defeated by conduct, by representations, by misstatements of a character which would operate and enure to forfeit and to take away the pre-existing equitable title. But I conceive it to be clear and undoubted law, and law the enforcement of which is required for the safety of mankind, that in order to take away any pre-existing admitted equitable title, that which is relied upon for such a purpose must be shewn and proved by those upon whom the burden to shew and prove it lies, and that it must amount to something tangible and distinct, something which can have the grave and strong effect to accomplish the purpose for which it is said to have been produced/ ”
In Professor James Barr Ames’ Cases on Trusts, 2nd ed., in a note on
Dearle
v.
Hall,
it is said (p. 328): “ Whatever view may be entertained as to the English doctrine which prefers the assignee who first gives notice, the second assignee is in several contingencies clearly entitled to supplant the first assignee. E. g. (1) If, acting in good faith, he obtains payment of the claim assigned;
Judson
v.
Corcoran,