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Chapin v. Walker.

1. In the first place, if he were entitled in this case to that relief, it would be necessary for him to seek it by a cross-bill. It is well settled that any affirmative relief sought by a defendant in an equity suit must be by cross-bill, and can never be granted upon the facts stated in the answer. Story's Eq. Pleadings, Redfield's edition, sec. 398 A.; McConnell v. Smith, 23 Ill. 611; Armstrong v. Pierson, 5 Iowa, 317.

2. It is also well settled that, according to the practice which prevails in the federal courts in a suit to foreclose a mortgage, the mortgagee's title must be investigated at law. In a foreclosure proceeding, the court will not inquire what interest the mortgagee has in the mortgaged premises. 2 Jones on Mortgages, sec. 1482; Bull v. Meloney, 27 Conn. 560; Palmer v. Mead, 7 Conn. 149; Hill v. Meeker, 23 Conn. 592; Williams v. Robinson, 16 Conn. 517; Dial v. Reynolds, 96 U. S. 340.

In the last named case the supreme court, per Swayne, Jus tice, say: "It is well settled that, in a foreclosure proceeding, the complainant cannot make a person who claims adversely to both the mortgagor and mortgagee a party, and litigate and' settle his right in that case. Barbour, Parties in Equity, 493,. and the cases there cited."

In Hill et al. v. Meeker, supra, it appeared that the title of the mortgagee to one of several tracts of land embraced in the mortgage was denied. The case was exactly analogous to the one at bar, and the court held that the complainant could' take the decree of foreclosure, leaving the parties at liberty to litigate the title in an action at law.

The decree in this case will be modified so as to provide that said decree, and the sale thereunder, shall be without prejudice to the right of the respondent Brockway, by proper legal proceedings, to contest the legal title to the land described in the answer as claimed by him.

VOL. II-12

In the Matter of Receivership of Iowa and Minnesota Construction Co.

IN THE MATTER OF RECEIVERSHIP OF IOWA AND MINNESOTA CONSTRUCTION COMPANY.

(District of Iowa. May, 1881.)

1. REMOVAL-CAUSE CANNOT BE REMOVED BEFORE SERVICE OF PROCESS OR APPEARANCE.-The mere filing of a petition or bill without the issuing of process or service of notice of any kind, and where there is no appearance, does not constitute a suit which may be removed from a state to a federal court.

On motion to remand.

The Iowa and Minnesota Construction Company is a corporation existing under the laws of Iowa.

On the second day of February, 1875, one L. Schoonover filed his petition in the circuit court of Jones county, Iowa, alleging that he had previously, as trustee for Stacey & Walworth, obtained judgment against said corporation for $3,759.57, which remained unpaid; that the capital stock of said corporation was $100,000, and had been subscribed by certain persons who were named, and that said capital stock had not been paid in to a greater extent than twenty per cent. of the amount subscribed. It was further alleged that said corporation was insolvent, and that the petitioner could find no property or assets to satisfy the aforesaid judgment.

Thereupon the petitioner prayed to be appointed receiver of said corporation, with authority to take possession of the books and papers thereof, and to levy a sufficient assessment upon the stockholders to liquidate the liabilities of the company. By an order of the judge, indorsed upon the petition, the same was set down for hearing on the first day of the March term, 1875, of the circuit court of Jones county, upon notice to be given to each stockholder and others interested, by publication in a newspaper and by mailing a copy to the reputed postoffice address of each stockholder.

There is due proof of the publication and mailing of notices, as required by the order of the judge, and on the

In the Matter of Receivership of Iowa and Minnesota Construction Co.

second day of March, no one appearing for the stockholders, default was entered against them and a decree rendered appointing the said Schoonover as receiver and fixing his bond at $5,000.

Afterwards several assessments upon the stockholders were ordered by the court or by the judge in vacation, for the payment of debts of the company, and several reports were made by the receiver and passed upon by the court, from some of which it appears that he had instituted suits against several of the stockholders, including F. E. Hinckley, A. B. Cox, J. Jameson and George Boone.

These proceedings were carried on in the Jones county circuit court without appearance on the part of the stockholders, until the third of November, 1879, when George Boone, John M. Whittaker and Frances E. Hinckley filed their intervening petition, therein alleging that they are stockholders; that certain claims against the company are fraudulent, denying notice of the proceedings, besides numerous other allegations, which need not be repeated here. By said petition they pray an accounting, and that the orders for assessment upon the capital stock be set aside, as well as the order appointing Schoonover as receiver. Upon the filing of the intervening petition in vacation, and without notice to any one other than that which is afforded by the filing of the same, a petition and bond in due form were filed in the clerk's office of the state court for the removal of the cause to this court. The receiver now appears here and moves to remand.

Miller & Godfrey, for motion.

G. W. Kretzinger, contra.

MCCRARY, Circuit Judge. As the case stood prior to the filing of the petition of intervention (which is in substance a bill of review), it was not removable under the act of March. 3, 1875, because the time for removal had passed.

The case had been pending in the state court over three

In the Matter of Receivership of Iowa and Minnesota Construction Co.

years. The statute requires that the petition for removal shall be filed "before or at the term at which said cause could be first tried and before the trial thereof." Sec. 3, act of March 3, 1875.

If the cause is removable, it must be upon the ground that the petition of intervention or bill of review above named is a suit within the meaning of the act. The language of the law is, "that any suit of a civil nature, at law or in equity, now pending or hereafter brought in any state court,” etc., may be removed. The sole question here is whether the mere filing of a petition under the state practice in a court of the state, without the issuing or service of notice or process of any kind, constitutes a suit within the meaning of the act. I am clearly of the opinion that it does not. Upon general principles, I should say without hesitation that process is essential to the institution of a suit. In the very nature of the case it must be necessary to bring the party defendant into court before any step can be taken to change the forum or for any other purpose affecting his rights.

The reasons for this rule are too manifest to require statement here; but it is also clear that the suit must exist in the state court, according to the state law, before it is a suit removable under the act of congress. It must be a suit in which a judgment or decree could be rendered in that court or some action taken affecting the rights of parties.

In other words, it must be a suit" commenced " in the state court, within the meaning of the state law.

How then are suits to be commenced under that law? By section 2599 of the Code of Iowa, 1873, it is provided that "actions in a court of record shall be commenced by serving the defendant with a notice, signed by the plaintiff or his attorney, informing the defendant of the name of the plaintiff, and that on or before a date therein named a petition will be filed," etc.

The term "action," under the statute of Iowa, is identical with the word "suit" in the act of congress.

Farmers L. & T. Co. v. C. R. R. of Iowa.

This step, or some other equivalent to it, must be taken before a suit is pending, for the purposes of the removal act, unless indeed service be waived by a voluntary appearance. The motion to remand is sustained.

THE FARMERS LOAN & TRUST COMPANY V. THE CENTRAL RAILROAD OF IOWA.

(District of Iowa. May, 1881.)

1. RECEIVER OF RAILROAD-PURCHASE OF PROPERTY AT FORECLOSURE SALE-LIABILITY TO SUIT IN CERTAIN CASES.- Where, in a suit to foreclose a mortgage upon a railroad, a receiver appointed by the court had been discharged, and the property by order of the court turned over to the purchaser, the court reserving jurisdiction of the case for the purpose of enforcing debts and liabilities incurred by the receiver: Held, that suit to enforce unsatisfied claims, whether upon contract or tort against the receiver, which, if established, would constitute liens upon the property, are to be prosecuted against the property as proceedings in rem, upon proper notice to the purchaser, and not against the discharged receiver.

2. ESTABLISHMENT AND ENFORCEMENT OF LIEN.-It is competent for the court in such a case to establish a lien against the property in the hands of the purchaser, and to fix a time for the payment of the sum found due, and in default of such payment to order a sale of the property. The cause is to be tried with or without a jury, according to the nature of the claim as to being legal or equitable.

Love, District Judge.- This case is now before the court upon a motion by H. L. Morrill, late receiver, and the Central Railroad Company of Iowa, to rescind an order made at the May term, 1880, granting permission to Mahala Clear, as next friend of Edward Sloan, to sue said receiver, Morrill, for personal injuries received by said Edward Sloan during the receivership of said Morrill.

The order granting leave was made after receiver Morrill had been discharged, and subsequent to the final decree of May 20, 1879, by which the railway property and all funds in the custody of the court had been turned over to the new railway company, called the Central Iowa Railway Company.

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