SHELDON ET AL. v. SILL

The case was argued by Mr. Romeyn, for the appellants, and Mr. Ashmun (in a printed argument), for the appellee.

Only so much of the arguments will be given as bear upon the point of jurisdiction. Mr. Romeyn, for the appellants.

The Circuit Court had no jurisdiction.

The complainant below claimed as assignee from a mortgagee, who was a citizen of the same State with the defendants, the mortgagors.

A bond and mortgage, under the laws of the State of Michigan, and in every court of equity, and by the adjudications of this court, on a bill filed to sell mortgaged property, foreclose the equity of redemption, and collect the debt secured by the mortgage, constitute a chose in action, within the intent and meaning of the eleventh section of the Judiciary Act of 1789.

Before stating the points under this, we beg leave to refer to the case of Dundas et al. v. Bowler, 3 McLean, 205. The opinion in that case was repeated by the court as its opinion in this. It asserts that the eleventh section of the Judiciary Act of 1789 "is in conflict with the Constitution"; that the right of a citizen of one State to sue the citizen of another State in the Federal courts, in all cases, is given directly by the Constitution; that Congress may not restrict it; that the converse is "a new and most dangerous principle, and cannot be maintained."

Points under this Proposition. I. The eleventh section of the Judiciary Act of 1789, inhibiting a suit by an assignee of a chose in action, in cases where the assignor could not have sued, if no assignment had been made, is constitutional; because, the disposal of the judicial power, except in a few special cases, belongs to Congress; and the courts cannot exercise jurisdiction in every case to which the judicial power extends, without the intervention of Congress, who are not bound to enlarge the jurisdiction of the Federal courts to every subject which the Constitution might warrant. So, again, it has been decided, that Congress have not delegated the exercise of judicial power to the Circuit Courts, but in certain specific cases. Both the Constitution and an act of Congress must concur in conferring power upon the Circuit Courts. A considerable portion of the judicial power, placed at the disposal of Congress by the Constitution, has been intentionally permitted to lie dormant, by not being called into action by law. The eleventh section of the Judiciary Act of 1789, giving jurisdiction to the Circuit Courts, has not covered the whole ground of the Constitution, and those courts cannot, for instance, issue a mandamus, but in those cases in which it may be necessary to the exercise of their jurisdiction; for, —

1st. This is the settled, practical construction, which, irrespective of express adjudications on this topic, concludes the question.

2d. The point itself has been repeatedly and fully discussed and directly settled, on solemn deliberation, and not "without inquiry as to the validity of the act."

We propose to cite some authorities on these propositions, in the above order; and then to notice the authorities cited in the opinion below.

First. Cases as to practical construction and its effect,

(The counsel then cited a number of cases under this head.)

Second. Cases to show that this principle has been deliberately settled.

The general principle for which we contend is the necessity of legislation to define and vest jurisdiction in the Circuit Court. The opposing principle is, the right and duty of the courts to exercise jurisdiction to the extent of the constitutional limit, by virtue of its provisions and without the authority of Congress. We refer to United States Bank v. Deveaux, 5 Cranch, 61; Osborne v. Bank of United States, 9 Wheaton, 738; 1 Wn. 235; 7 Cranch, 32; Ibid. 504; 3 Wheat. 336; 12 Pet. 616; also 623, 642; 14 Pet. 75; 2 Howard, 243.

In Turner v. Bank of America, 4 Dall. 8, the very question arose, and was decided. Cary v. Curtis, 3 Howard, 245; 1 Kent's Commentaries, 513.

(The counsel then reviewed the authorities cited to support the opinion in Dundas v. Bowler, and contended that they did not sustain it.)

II. The statute in question should be construed according to the ordinary and usual acceptation of the terms used in it. Because, —

1st. It is constitutional.

2d. If unconstitutional, it should be entirely rejected.

If sustained at all, it should be subjected to the ordinary rules of interpretation.

III. The phrase, "other choses in action," includes the bond and mortgage in this suit. Because, —

1st. The statute was not intended to be confined to negotiable instruments, as is intimated in Dundas v. Bowler, 3 McLean, 209. For, —

First. If an instrument not negotiable be assigned, the assignee can sue in equity in his own name, and therefore the reason given in Dundas v. Bowler is not sound.

Second. The exception, in the Judiciary Act, of foreign bills of exchange, will leave nothing of consequence for this language to cover, if it be confined to negotiable instruments.

Third. This comprehensive meaning of the clause is a matter of express decision, — decisions which have remained for forty years unquestioned. In Sere v. Pitot, 6 Cranch, 332, Chief Justice Marshall decides that promissory notes were not alone in the contemplation of Congress, and that the "intention was to except from the jurisdiction those who could sue by virtue of equitable assignments, as well as those who could do so by virtue of legal assignments." "The term `other chose in action,' is broad enough to include either case."

2d. The object of the statute was to preserve to the State judicatures the interpretation and enforcement of contracts made between their own citizens; and the general nature of a bond and mortgage, and the fact that they affect the realty of the State, render it particularly proper that they should not be considered out of the statute.

3d. There is greater reason for inhibiting the collection of mortgage debts in the United States courts, by an assignee, than of negotiable instruments, because, in case of the latter, a transfer for the purpose of jurisdiction would defeat the action; while in the case of the former, if the assignment of a mortgage be viewed as the transfer of a title, the consideration cannot be made the subject of inquiry. Briggs v. French, 2 Sumner, 252; Smith v. Kernochen, 7 Howard, 216.

4th. The statute includes every such right as is ordinarily termed a chose in action; by which is meant, not a right which may be sued for, but one which can be realized only by suit; not a claim to property in specie, which may, if opportunity offer, be exercised by caption or entry, but a right to a debt, or damages, or money which can be recovered only by action. 1 Chitty's R. 99.

A deed of land is not a chose in action. A writer on the jus mariti, after informing his readers that the husband might dispose of his wife's choses in action, will hardly need to add that this did not include her "deeds for real estate."

5th. The transferee of a bond and mortgage is usually termed an assignee, and therefore is within the act.

We ask an application of the old and familiar rule, that, when words of a fixed legal import are used in a statute, such meaning will be accorded to them in its construction. Chief Justice Marshall applied it to the interpretation of this statute in 6 Cranch, 332, when, referring to the reason why the court, in 4 Cranch, held that an alien administrator might sue when the intestate could not, he said, "The representatives of a deceased person are not usually designated by the term assignee." So Justice Story at the Circuit and this Court, on several occasions, in determining that the bearer of a promissory note could sue when the payee could not, said that the plaintiff's title did not rest upon what was generally and commonly known as an assignment, and that the words of the statute were employed in the ordinary popular professional sense.

6th. Even at law, the mortgage is considered but as a chose in action, and the mortgagor is the real owner.

(The counsel then cited a number of cases to show how a mortgage, even at law, is regarded by the English courts, by American courts generally, and by the Federal courts.)

Douglas, 610; 1 Powell on Mortgages, 109, 110; 4 Kent, 159, 160; 2 Vernon, 401; 2 Jac. Walk. 194, note; 4 Conn. 235, 424; 6 Conn. 158 to 164; 18 Johns. 114; 4 Kent's Comm. 161, note a; 21 Wend. 483; 2 Gallison, 154; 5 Peters, 483; 1 Paine, 534; 9 Wheat. 489.

7th. Whatever be the doctrine at law, in equity a mortgage is styled and treated; in all its relations and for all purposes, as a chose in action. 2 Jac. Walk. 185; 1 Hopkins, 594; Story's Equity, §§ 1013, 1015, 1016.

8th. If it be conceded that the complainant might have brought ejectment on the mortgage, it would not affect the character of the action. For, —

First. This action can be fully sustained by an informal transfer, or even a simple delivery of the mortgage, without writing; while an ejectment would require a formal, regular transfer, with the solemnity of other deeds of realty, in order to pass the legal estate.

Second. That both proceedings grow out of the same transaction proves nothing; because there may be two remedies for one debt, in one of which the Federal court has jurisdiction, and not in the other.

The indorsee of a note may sue on a direct promise to him by the maker, when he could not sue as indorsee. 5 Howard, 278.

The assignment of the mortgage, without an assignment of the debt, is a nullity. 2 Cowen, 23. While an assignment of the debt carries with it the interest in the land. 2 Gall. 155. In this case, an assignee of the bond alone could not sue on it in this court. This proves that an assignment of the debt will not confer jurisdiction.

If we grant that he could sue in ejectment at law as assignee of the mortgage, the question would still remain, how should he be viewed when suing in equity for his money, and not for the land, and on both the bond and mortgage?

Finally, we ask particular attention to the effect upon the rights of the mortgagee produced by the statute of Michigan, forbidding him to bring ejectment before foreclosure and sale. How emphatically does it reduce his claim to a chose in action. He has no longer a title, upon which he can even take possession; but according to the only substantial right ever intended to be secured, a claim for money, and the right to an appropriation of the land by suit to make it. And it is no answer to this, that this law, taking away a remedy, does not bind the Federal court. It is equally high evidence of the doctrines of our State, in relation to the nature of the right of a mortgagee.

The argument of the counsel for the appellee upon the question of jurisdiction was as follows.

With regard to the first point, the objection is based upon the act of Congress, which provides that the Circuit Court shall not have cognizance of any suit to recover the contents of any promissory note or other chose in action, in favor of an assignee, unless such suit might have been prosecuted in such court to recover said contents if no assignment had been made, except in cases of a foreign bill of exchange.

The Constitution of the United States (sec. 2 of article 3) says the judicial power shall extend to controversies between citizens of different States, and, in section one of the same article, it says that this judicial power shall be vested in one Supreme Court, and such inferior courts as Congress shall from time to time establish.

Now we would remark, first, that the case before the Circuit Court was a controversy between citizens of different States, and to such a controversy the judicial power of the courts of the United States extends by the Constitution, and by the same Constitution that power is vested, except where the Supreme Court has original jurisdiction by the Constitution, in the inferior courts created by Congress. This judicial power, therefore, to take cognizance of this case, is, by the Constitution, vested in the Circuit Court, and the plaintiff claims the constitutional right to have his controversy with Mr. Sheldon, living in Michigan, decided by that court. Congress has said, by the provision above referred to, that there are certain controversies between citizens of different States which the United States courts shall not take cognizance of; yet the judicial power of the court extends to them by the Constitution, and citizens of the different States have the right to have that power exercised in their controversies. Where does Congress get the power or authority to deprive the courts of the United States of the judicial power with which the Constitution has invested them? Congress may create the courts, but they are clothed with their powers by the Constitution, and we submit that the provision of the act of Congress materially conflicts with the provisions of the Constitution, and is void. It has been settled, that an act of Congress, enlarging the jurisdiction of the Supreme Court beyond the terms of the Constitution, is void. Marbury v. Madison, 1 Cranch, 137. Can it any more take away a constitutional power than it can confer an unconstitutional one? We submit that it cannot. The jurisdiction of this class of controversies is in the Circuit Court. The Constitution makes no such distinction as the act of Congress does, and we respectfully submit, that it is of the utmost importance to citizens of the different States that the whole judicial power granted by the Constitution to the courts of the United States should be exercised. We are ware that in some cases it has been assumed that this act of Congress is valid; but we submit that there has been no decision of this court to that effect, and even if there had, being erroneous, the court would reverse it.

But a mortgage is not a promissory note or chose in action, within the meaning of the provisions of the act of Congress. A mortgage is a conveyance of the fee simple of real estate, liable to be defeated subsequently by payment of money, to secure the payment of which it was made. It is in no sense a chose in action, which is a thing in action, a right of action, a thing recoverable in action, a debt, a demand, a promissory note, a right to recover damages. A chose in action was originally a right of action not assignable at law. It was a cause of suit for a debt due or a wrong. The bond with the mortgage may be a chose in action; but the estate conveyed by the mortgage is not. It is a realty. It is real estate conveyed, and at law the estate is absolute, forfeited, perfect. In equity it may be redeemed; but the estate is nevertheless absolute, and redemption is a matter of favor or equity rather than a legal right. How does this partake of a chose in action? Now what is a foreclosure bill? It is not a suit upon a bond, but a proceeding in law against property, to cut off the equitable right to redeem within a certain period, and to procure a sale of the real estate. It is not a personal action, — seeks no decree against the person, — but simply asks that certain property conveyed to the plaintiff may be sold, and further right to redeem foreclosed. An ejectment lies upon a mortgage, especially after forfeiture; the mortgagee may convey the estate, and ejectment lies in favor of his grantee. Will it be said that his grantee, though living in another State, could not maintain an ejectment in this court to recover the property? Cannot his grantee equally appeal to this court to foreclose the equity to redeem? This point has been directly passed upon in the Circuit Court for the District of Ohio, in the case of Dundas et al. v. Bowler and others, reported in the first volume of Western Law Journal, and the decision of the court is sustained by the soundest reasoning. 3 McLean, 205.