City of St. Anthony v. Mason , 22 F.2d 306 ( 1927 )

CAVANAH, District Judge.

This suit was filed in the state court, where a petition for removal to this court was granted. The jurisdiction of this court is challenged by a motion to remand, upon the ground that the complaint does not disclose a separable controversy, nor is there a diversity of citizenship as between the plaintiff and all of the defendants.

The facts alleged, which appear on the face of the complaint and not disputed, so far as necessary to bo stated on this motion, are that the plaintiff, a municipal corporation of the state, brings this suit against the defendant Mason, a resident of the state, and the defendant ¿Etna Casualty & Surety Company, upon a bond furnished by the defendants to the city, in which the defendant Mason, as principal, and the surety company, as surety, jointly and severally obligated themselves for the faithful performance of the official duties of Mason as treasurer of the city, and to account for any pay over to the city all moneys or other property that may come into his hands as such treasurer. While this bond was in force, the First National Bank of St. Anthony, which had not been designated as a depository' of city funds, and after the treasurer had deposited certain moneys of the city therein, suspended payment and closed its doors because of its insolvency.

Tho charge is made that such deposit was unlawful, and made in violation of the official duties of the treasurer. Tho bond involved here is an official one of the treasurer and the ¿Etna Surety Company is the surety thereon. In it they both undertook and agreed to account for and pay to tho city all moneys coming into the custody of its treasurer. It was a joint and several undertaking, and both are liable to the city thereon by its terms and the statute under which it was given. The surety company cannot alone be held responsible on the bond, unless tho treasurer is liable also. Cochran v. Montgomery County, 199 U. S. 260, 26 S. Ct. 58, 50 L. Ed. 182.

There is here but a single controversy, and tlia-t is the recovery of city funds, which both tho treasurer and the surety have, by the terms of the bond, agreed to account for at' all times. That is the main purpose of the action. The subjeet-inatter of the suit is the samo as to both of the defendants, as only one debt is involved, and the cause of action is one and the same. The dty had a right to proceed against either of the defendants by a separate suit, or join them in one action. If the defendant surety company has a right of removal, then the city may be compelled to divide its cause of action and bring two suits, instead of one, for the recovery of the same money. This would annul the provision of the bond providing for a joint liability. The city has a right, under the ferns of the bond, to treat it and sue on it as a joint bond. Hyde v. Ruble, 104 U. S. 408, 26 L. Ed. 823, and Guarantee Co. of North America v. Mechanics’ Sav. Bank & Trust Co. (C. C. A.) 80 F. 766. In the ease of Mutual Reserve Fund Life Ass’n et al. v. Farmer (C. C. A.) 77 F. 929, the rule is thus stated: “In an action against a principal and his surety on a bond, note, or other obligation, there is no separable controversy, such as will entitle one of the defendants to remove the ease when he and plaintiff are citizens of different states.”

Wo have here a cause of action based upon a bond providing for a joint liability of the defendants, which requires the application of the principle, recognized by repeated adjudications, that a suit cannot be removed from a state court to a federal court on the ground of a separable controversy unless the complaint sets forth two or more causes of action, one of which is wholly between citizens of different states. Barney v. Latham, 103 U. S. 205, 26 L. Ed. 514; Pirie v. Tvedt, 115 U. S. 41, 5 S. Ct. 1034, 1161, 29 L. Ed. 331; Ayres v. Wiswall, 112 U. S. 187, 5 S. Ct. 90, 28 L. Ed. 693. The plaintiff has elected to bring a joint action, which it had a right to do, upon the bond, providing for a joint liability of the defendants, and the defendant surety has no -right, where no charge of fraudulent joinder is made, to say that the action shall be several, when the plaintiff elects to make it joint. Torrence v. Shedd, 144 U. S. 527, 12 S. Ct. 726, 36 L. Ed. 528; Chesapeake & Ohio R. Co. v. Dixon, 179 U. S. 131, 21 S. Ct. 67, 45 L. Ed. 121; German-American Merc. Bank v. Gas Service Corp. of America et al. (D. C.) 228 F. 827.

There being no separable controversy existing here, and the plaintiff and the defendant Mason being residents and citizens of the same state, no diversity of citizenship appears as between the plaintiff and all of the defendants, and therefore this court is without jurisdiction.

The motion to remand is granted.