Chatham National Bank v. Merchants' National Bank — 8 N.Y. Sup. Ct. 702

Majority

p. 702

THE CHATHAM NATIONAL BANK OF THE CITY OF NEW YORK, Respondent, v. THE MERCHANTS’ NATIONAL BANK OF WEST VIRGINIA, Appellant

Headnote

Act of 1789, sea. 13,1 U. S. Statutes at La/rge, page 79—residence of National Bank ■ within the meaning of— “Sintering of am appearance ” of defendant—what constitutes—Motion papers — defects in copies disregarded, when they do not exist in originals.

A national bank, organized under the acts of congress, is a resident of the State in which it is located and does business, within the meaning of the act of 1789, authorizing the removal of causes into the United States courts.

The plaintiff’s attorneys opposed a motion, made by the defendant, for the removal of this cause into the United States court, on account of certain defects in the copies of the papers served upon them. Held, that as the defects did not exist in the papers themselves, on which the application was made, that they were properly disregarded.

On the 15th of December, 1873, a notice of the defendant’s appearance in this action was served upon the plaintiff’s attorneys. Held, that the mere notice of an appearance was not the entering of an appearance required by the act of congress, nor a sufficient compliance with Rule 7 of this court.

The petition, filed by the defendant for the removal of the cause, contained the statement that it then entered its appearance and had not done so before; and the order requiring the plaintiff to show cause why the application should not be granted, recited the fact that the defendant, on the day of its date, had entered its appearance; held, that these statements sufficiently showed an entry of appearance, and that, even if they did not, procuring the order and making the motion, were equivalent to the entry of an appearance within the technical meaning of the term. (Brady, J., dissenting.)

Appeal from' an order made at the Special Term, denying a motion made by the defendant to remove the cause into the Circuit Court of the United States. The facts are stated in the opinion.

William H. Scott, for the appellant,

cited Stevens v. Phœnix Ins. Co. ( 41 N. Y., 149 ); Barney v. Globe Bank (2 Am. L. Reg. [N. S.], 221; Field v. Blair (1 Code Rep. [N. S.], 292); Ex parte Isaacs ( 12 Wend., 193 ); Norton v. Hayes ( 4 Den., 245 ).

B. F. Watson, for the respondent,

cited Ayres v. Western R. R. Co. ( 32 How., 351 ) ; Bowen v. First Nat. Bank ( 34 How., 408 ); Manufac. Nat. Bank of Chicago v. Baack ( 40 How., 409 ).

The sworn petition of the defendant stated that the plaintiff was a corporation or banking association, created and existing under and by laws of the State of Hew York and of the United States, located and doing business at the city of Hew York, in the State of Hew York, and at the time of bringing the suit, was and is still a citizen of the State of Hew York. This was not denied on the part of the plaintiff, and should, for that reason, be accepted as the truth ; and, as such, it was sufficient to present a case within the act of congress, providing for the removal of causes into the Circuit Court of the United States, so far as the right depended upon that circumstance.

It is claimed, however, that the name by which the plaintiff has been incorporated, indicates it to be an association formed for banking purposes under the laws of the United States, providing for the creation and circulation of a national currency; and that circumstance, added to the fact stated in the petition, that it is a corporation or banking association, created and existing under the laws of the United States as well as of this State, sufficiently warrants that conclusion.

But that does not divest the defendant of the right to insist upon the removal of the cause into the Circuit Court of the United States, even though it may have been withheld, where each of the parties to the action is shown to be a foreign corporation.^[11] These associations have been held liable to the attachment laws of this State, although existing and transacting their business within its boundaries, because the remedy they provide for, includes such associations, on account of the circumstance of their creation under the laws of another government than that of the State,^[12] But that does not justify the conclusion, that they are foreign corporations within the ordinary signification of those terms. That certainly cannot properly be said to be their character; for, when they are organized and located within this State, they are as completely citizens of the State, within the signification of the act of congress, providing for the removal of causes into the.Circuit Court, as though they were incorporated exclusively under its laws.

p. 704

The act of congress upon this subject, constitutes, under the Constitution of the United States, a portion of the laws of the State, paramount even to those enacted by its own Legislature. It exists through, and extends over, the State, as completely and entirely as any legislation can by possibility do; and it is a portion of the positive law, required to be observed and maintained by all its citizens and inhabitants. When an association for banking purposes is formed within the boundaries of the State, for the purpose of being located and transacting business within its limits, it necessarily becomes an inhabitant of the State. This is clearly implied by the provision of the act requiring the certificate, under which the association may be formed, to state the place where its operations of discount and deposit are to be carried on; designating not only the State, territory or district, but the particular county or city, town or village.^[11] Besides that, the names and residences of the shareholders are also required to he stated; and the general power is conferred upon it, of suing and being sued in any court of law and equity, as fully as natural persons; and its usual business is required to be transacted at an office, or banking-house, located in the place stated in its organization certificate,^[12] The association, when formed, has no other residence or domicil, than that designated, under the provisions of the act, in the certificate; and that substantially and effectually renders it a corporation of the State, within which it may be located, formed under that portion of its laws, which, under the Constitution, have been enacted for its inhabitants by the general government. As such, it is to be presumed, under the construction given to the act of congress providing for the removal of causes, to he created and formed by citizens of the State in which it may exist, and for that reason to he a citizen ®i the State within the meaning of that act.^[9] The act of congress, of July 27, 1868, does not deprive the defendant, although itself a hanking association, organized under the United States banking laws, of the right to insist upon the removal of the cause. That act provides for the removal of actions, brought against corporations, organized under a law of the United States, or any of their

p. 705

members, in a new class of cases, not within the other provisions of congressional legislation on this subject. And it permits that to be done when the defendant states in the petition that a defense exists, arising under or by virtue of the Constitution, or any treaty, or law of the United States. From this privilege, banking associations, organized under the laws of the United States, are excluded by an exception contained in the act.^[11] But the exception, by its terms, extends no farther than the subject-matter of the act-in which it is contained, and, consequently, can have no effect upon the provision made for the removal of causes in other cases by the preceding law. It simply left these associations unaffected by its provisions, and entitled to the privileges provided in this respect for suitors by other acts of congress; and among them, the right of removing the action into the Circuit Court of the United States, when the circumstances of the case appear to be such as are required to justify that proceeding. By the act under which the application was made in this case, the petition was required to be filed at the time of entering the defendant’s appearance in the action;^[12] and that, it was claimed, was not done. Other objections of a mere formal nature were relied upon by way of answer to the application. They were predicated upon defects in the copies of the papers served upon the plaintiff’s attorneys; but as they did not exist in the papers themselves on which the application was made, they were very properly disregarded upon the hearing. The more substantial objection was placed upon the circumstance, that a notice of the defendant’s appearance was served, in the action, on the 15th of December, 1873, while the petition itself was not presented until the seventh of the following January; and, for that reason, the court denied the application for the removal of the cause, holding that the appearance was entered, within the meaning of the terms used in the law, at the time when the notice itself was served.

But this was a mistaken view of the provision requiring the petition for the removal of the cause to be filed at the time of entering the defendant’s appearance; for the mere notice of appearance was not the entering of an appearance required by the act of congress.

p. 706

That, by Rule 7^[11] of this court, is something more than the mere service of a notice. It contemplates an act to be performed on the filing of the notice with proof of its service. Upon that being done, the rule authorizes the defendant’s appearance to be entered as of the time when the notice itself was served.

The notice was simply a notice of the defendant’s appearance, without an entry of it, and was no more than the notice of retainer, which, under the preceding practice, the defendant was authorized to serve in the action, which was held insufficient to constitute the entry of appearance required by the act of congress, providing for the removal of causes into the United States Circuit Court, on the ground on which the right is claimed in this action,^[12]

No other act appeared to have been performed on the part of the defendant, before the filing of the petition, from which it could be claimed that an appearance of the defendant had been entered; while the petition contained the statement, that it then entered its appearance, and had not done so before. And the order requiring the plaintiff to show cause why the application should not be granted, recited the fact that the defendant, on the day of its date, had entered its appearance, and at the same time filed its petition for the removal of the cause, and offered the security required by the act, by a bond then filed. And, as there was no contradiction of this statement, it should be accepted as true, as long as the mere service of the notice was not the entry of an appearance.^[9] No appearance appeared, by the papers, to have been previously entered; and this statement, as well as the other to the same effect contained in the petition, sufficiently showed its entry at the time when the order was made, to constitute a performance of what the act of congress required to be done in that respect. But, if it did not, procuring the order and making the motion were equivalent to the entry of an appearance, within the technical meaning of those terms; for by such acts the defendant, of necessity, appears in court. They could not be performed without an appearance in court, as well as an appearance in the action. . This was substantially held in the case of Ayres v. Western Railroad

‡ ‡ Porter v. Bronson, 29 How., 292 .

Dissent

p. 707

Company ;^[11] where, obtaining an order extending the time to answer, was considered to be the entry of an appearance, and, for that reason, sufficient to justify the denial of a motion, afterward made for the removal of the cause.^[12] The provisions of the act of congress were complied with in all other particulars, and an order should therefore have been directed for the removal of the cause.

The order appealed from should be reversed, with costs, and an order entered, directing the removal of the cause into the Circuit Court of the United States.

(dissenting):

The twelfth section of the judiciary act, which relates to the removal of causes from the State to the federal courts, provides, that if the defendant, among other things to be made apparent, shall, at the time of entering his appearance in such State court, file a petition, etc., it shall then be the duty of the State court to accept the surety, and proceed no further in the cause. The right of removal, however, is purely statutory, and when the defendant attempts to exercise it, he must show that he has complied with the law in its requirements. He must, at the time of entering his appearance, which is the first step, file his petition; and the question which is suggested m limine, on this appeal, is, whether the defendants’ appearance was entered in this action, in the manner provided by the rules and practice of this court. It is not pretended that anything more was done on that subject, than the service of a notice of retainer on behalf of the defendants, and the presentation of the petition, containing a statement that the petitioners do now enter their appearance in this action, but have not done so before. The notice of retainer, however, was not claimed by the defendants to be an appearance. The defendants aver their appearance when the petition was signed or presented, and not before. It is not pretended, either that any rule was entered by the defendant on the subject, either on their own behalf, or by the plaintiffs’ attorney, under Rule 14 of this court. The appearance of the defendants was not entered, therefore, when the peti

* 48 Barb., 132 .

† † See, also, Cooley v. Lawrence, 12 How. P. R., 176 .

p. 708

tion was presented.^[2] In Bristol v. Chapman, the defendant went into court at Special Term, and caused his appearance to be entered in the minutes of the court. The appearance was held to be irregular. The court said, Morgan, J., delivering the opinion: “ The rules of this court have prescribed the manner in which the defendants may appear, and what shall be deemed an appearance. This is by service of notice of retainer, on filing which, the defendant may, doubtless, enter his appearance in the clerk’s office, and at the same time file his petition.” In Norton v. Hayes, it was held that notice of retainer was not entering his appearance, within the terms or meaning of the act of congress, but that entering an appearance with the clerk, at the time of filing the petition, was a compliance; and Beardsley, J., said: “ These being done at one and the same time, the application for the removal was made in due season.” The case of Redmond v. Russell (supra), was cited by -him to sustain the proposition just stated. In the latter case, Spencer, J., said: “ This is not a case in which the comity of the court is to be exercised; if this defendant is not strictly entitled to have his cause removed, we are bound to maintain our jurisdiction. The plaintiff has as strong a claim to have his cause retained here, as the defendant-can have to remove it. The whole question turns upon the point, when did the defendant enter his appearance?” The court declared that the entering an appearance, and filing the petition, are to be simultaneous acts. In Durand v. Collins, it was held that the execution of an undertaking upon arrest, was not, in theory or in fact, an act done in court. That the party’s appearing by - the filing of special or common bail, which prevailed prior to the Code, had no application to proceedings under the Code, and that no appearance was formally or actually entered in the action, until the defendant entered his appearance with the clerk of the court, which he had done at the time he filed his petition to remove the cause. In Cooley v. Lawrence, the question, what is an appearance in a State court, is considered somewhat elaborately, and it is said that what is held in such court to be a submission to its authority in the

p. 709

cause, whether coerced or voluntary, must be deemed an appearance ; and further, when such submission has once been made, it cannot be retracted. The appearance of the defendant in that case, was declared perfected by his submission to the court of a material question upon affidavits and argument, namely, the continuance of an injunction against him. The result of these considerations, is, that in order to enable a defendant to remove his case from this court to the federal court, he must enter his appearance according to the rules and practice of the court, and, at the same time file, or at least present, his petition. The defendants, not having entered such an appearance, were not regular in their proceeding to remove the cause; and the motion in the court below was properly decided. If the defendants claimed that the service of a notice of retainer was an appearance within the act of congress, under the practice which prevails in this court, then their application was too late, as it was not made until several days after such notice was served. They make no such claim ; they insist, on the contrary, as already suggested, that it was not an appearance, and rely, therefore, on the incident of the proceeding to remove, indicated by the statement, “ they now enter their appearance,” contained in their petition. The petition was not, nor was- anything contained in it, an appearance such as contemplated, nor did it amount to an appearance. It was of no greater significance than the service of a notice of retainer, which, for the general purposes of an action, is, under our Code, a sufficient appearance ; or of the execution of an undertaking, which, as we have seen, is not an appearance. It was not entermg an appearance, either in theory or in fact, and was in form a proceeding unknown, and, by analogy to the case of Bristol v. Chapman,^[2] irregular. It follows, therefore, that the defendants’ proceedings were premature, and the order made at special term should be affirmed.

Davis, P. J., concurred with Daniels, J.

Order reversed, with costs, and order entered removing the cause into the Circuit Court.

* Supra.

Footnotes

* Ayres v. Western Railroad Co., 48 Barb., 132 .
† † Bowen v. First National Bank of Medina, 34 How., 408 .
* 13 U. S. Statutes at Large, 101, § 6, sub. 2.
† † Id., § 6, sub. 3; also, § 8.
‡ ‡ Louisville, etc., Railroad Co. v. Letson, 2 How. (U. S.), 497; Stevens v. Phœnix Ins. Co., 41 N. Y., 149 , and cases referred to in the opinion.
* 15 U. S. Statutes at Large, 226, 227.
† † 1 U. S. Statutes at Large, 79, § 12.
† † Norton v. Hayes, 4 Denio, 245 .
* This is Rule 14 of the rules adopted Dec. 20, 1870.—[Rep.
* Redmond v. Russell, 12 Johns. Rep., 153 ; Norton v. Hayes, 4 Denio, 245 ; Bristol v. Chapman, 34 How. Pr. Rep., 141 ; Field v. Blair, 1 Code R. (N. S.), 292. Durand v. Hollins, 3 Duer, 686 ; Cooley v. Lawrence, 5 Duer, 605 . See also 8 Abbott Pr. Rep., 305 , note.