
    UNITED STATES NAT. BANK OF NEW YORK v. McNAIR.
    (Circuit Court, E. D. North Carolina.
    April 10, 1893.)
    1. JunisorcTtoN — Action by Indorsee or Promissory Norn — Pi,hading-—DE-MURRER.
    If ilie citizenship of the original payee of a promissory note is material to jurisdiction of ail action by an indorsee against tiie maker, the plaintiff must affirmatively plead it; and, it Ihe record contain no allegation thereof, the court will, for the purpose of disposing of a demurrer to the complaint on the ground that the assignor could not hare maintained suit, assume that ihe original panics to the note were, ac the time of bringing the aciion, citizens of the same state.
    
      2. Same — Right op Receiver op Rational Bank to Sue — Assignee by Operation op Law.
    By the judiciary act oí Marcli 3, 1887, as corrected by the act of August 13, 1888, it is provided that no federal court shall have cognizance of any suit on a promissory note by an assignee thereof unless such suit might have been prosecuted in such court if no assignment or transfer had been made. Action was begun in the circuit court in North Carolina, by a citizen of New York against a citizen of North Carolina, on a promissory note made to the cashier of a national bank, which was also a citizen of the latter state. The note had been indorsed to the plaintiff, and after indorsement the bank became insolvent, and a receiver was appointed. Plaintiff contended that suit could have been brought on the note by the receiver had no assignment been made, and that the court therefore had jurisdiction. Held, that the receiver would himself have been an assignee of the note, although the assignment would have been effected by operation of law, and that, as the bank could not have brought suit on the note in the circuit court, the court had no jurisdiction.
    3. Same — Construction op Statute.
    Under the above statute no suit can be maintained on a promissory note by an assignee unless such suit could have been maintained by the original payee thereof.
    At Law. Action by the United States National Bank of New York against S. P. McNair to recover tbe amount of a promissory note. On demurrer to complaint.
    Sustained, and action dismissed.
    Ricaud & Weill, for plaintiff.
    Du Brutz Cutler and G-eo. Rountree, for defendant.
   SEYMOUR, District Judge.

Suit is brought on a promissory note made by defendant to tbe cashier of tbe First National Bank of Wilmington. Tbe note was, before maturity, indorsed to tbe cashier of plaintiff, tbe United States National Bank of New York. After such indorsement tbe Wilmington bank became insolvent, and a receiver of such bank was duly appointed by tbe comptroller of the currency. Tbe complaint avers that plaintiff was at tbe commencement of this action, and still is, a citizen and resident of tbe state of New York, and that defendant is a citizen of North Carolina, but no averment is made respecting tbe citizenship of tbe First National Bank of Wilmington or of its. cashier. If tbe citizenship of tbe original payee is material to tbe jurisdiction of tbe court, it is essential to plaintiff's case to make it affirmatively appear upon tbe record. Parker v. Ormsby, 141 U. S. 81, 11 Sup. Ct. Rep. 912, and cases there cited. Not so appearing, it is proper to discuss the case, sub lite,- as if it did appear that tbe original parties to tbe note for whose contents this suit is brought were, at time of bringing tbe action, citizens of tbe same state. Such is tbe assumption of tbe defendant’s demurrer, as appears below.

Defendant demurs to tbe complaint upon tbe ground "that tbe suit is brought by tbe assignee of a promissory note to recover tbe contents thereof' when tbe assignor thereof, being a resident of- the same state as tbe defendant, could not have maintained a suit thereon if said assignment had not been made.” Tbe demurrer raises a question of jurisdiction depending upon tbe construction of tbe fourth clause of section 1 of tbe act of March 3, 1887, as amended by that of August 13, 1888, which reads as follows :

“Nor shall any circuit or district court have cognizance of any suit, except upon foreign hills of exchange, to recover the contents of any promissory note or other chose in action in favor of any assignee, or other subsequent holder, if such instrument be payable to bearer, and be not made by any corporation, unless such suit might have been prosecuted in such court to recover the said contents if no assignment or transfer had been made.”

The act of Í887 repeals that part of the act of March 3, 1875, which excepted notes and hills of exchange generally from the excluding clause of the judiciary act, and restored, in that respeci. such act. The judiciary act of September 24, 1789, (Rev. St. § (¡29, cl. 1,) gives to the circuit court original jurisdiction of all suits involving the value of $500 and upwards between citizens of different states: “provided, that no circuit court shall have cognizance of any suit to recover the contents of any promissory nob or other chose in action in favor of an assignee, unless a suit mighl have been prosecuted in such court to recover the said conten Is if no assignment had been made, except in cases of foreign bills of exchange.”

It is evident from a reading of the statute that plaintiff, being the assignee of a promissory note made by a citizen of North Carolina to another citizen of the same state, cannot maintain this action unless it could have been maintained had the note never been assigned. The contention of plaintiff is that a suit could have been brought on the note by the receiver of the Wilmington bank had so assignment of it been made. The argument assumes that the receiver would not in such case have been as-signee of the note, hut would have held it in some other way; for it is plain that if the note would, had it not been previously assigned by the; Wilmington bank, have come to the receiver's hands “by assignment or transfer,” then the case does not, as plaintiff contends it does, arise of an action on an assigned promissory note, wliich could have been maintained had there been no assignment. There would have been an assignment, — the assignment of the hank’s assets, — which would, had it not been previously transferred, have included the paper now in litigation. But the assumption underlying plaintiff’s theory is not in accordance with the hooks. A receiver is, by virtue of his appointment, assignee of the choses in action of the debtor, and can sue for them in his own name. High, Eec. § 443. The receiver of a national bank appointed by the comptroller of the currency is the statutory assignee of the association. Kennedy v. Gibson, 8 Wall. 498-506. It is true that; the assignment to the receive;!* was by operation of law, and not by act of the parties, and that it has been adjudged by the supreme court that the eleventh section of 'the judiciary act, supra, does not apply to administrators and executors, who may, perhaps, be looked upon as assignees by operation of law. Chappedelaine v. Dechenaux, 4 Cranch, 306; Childress v. Emory, 8 Wheat. 642. Any inference in favor of the position that a receiver is not an assignee, within the meaning of the act;, is answered by tbe case of Sere v. Pitot, 6 Cranch, 332, wbicb bolds that a general assignee of tbe effects of an insolvent cannot sue in tbe federal court, if bis assignor could not bave sued in these courts. Marshall, O. <T., delivering tbe opinion of the court, says:

“The circumstance that the assignment was made hy operation of law, and not hy the act of the party, might probably take the case out of the policy of the act, but not out of its letter and meaning. The legislature has made no exception in favor of assignments so made. It is still a suit to recover a chose in action in favor of an assignee whose suit could not have been prosecuted if no assignment had been made, and is therefore within the. very terms of the law. The case decided in 4 Cranch, 306, was a suit brought by an administrator and a residuary legatee, who were both aliens. The representatives of a deceased person are not usually designated by the term ‘assignees,’ and are therefore not within the words of the act. That case, therefore, is not deemed a full precedent for this.”

In Sere v. Pitot, supra, tbe persons wbo brought tbe action were appointed in pursuance of an application to tbe superior court of tbe territory of Orleans upon tbe nomination of an insolvent firm, were styled "syndics for tbe creditors,” and were vested with tbe estate of tbe firm, not by any formal assignment, but by tbe laws of tbe territory. Their position is therefore analogous to that of the receiver of a national bank, wbo is also appointed and vested with the estate of bis insolvenr, not by assignment .of parties, but by tbe law of the land.

I bave not deemed it essential to lay stress on tbe words, “.or transfer,” inserted in tbe fourth clause of section 1 of tbe act of 1887, but not being in tbe corresponding, section of tbe judiciary act. They were evidently, however, used with tbe purpose of enlarging tbe scope of tbe word “assignment,” and of making the clause cover every case in wbicb title to negotiable papers, whose contents might be tbe subject of a suit, should bave become vested in a third party, whether by act of tbe parties or operation of law. I am. therefore of tbe opinion that tbe plaintiff cannot bring bis suit within the terms of tbe act under discussion.

There is another view of tbe case, resting, it seems to me, both on authority and reason, wbicb is fatal to tbe jurisdiction of tbe court. The exception to tbe jurisdiction of tbe federal courts over controversies between citizens of different states, in as far as it is material to this action, is in these words:

‘•Nor shall any circuit court have cognizance of any suit to recover the contents of any promissory note in favor of' any assignee unless such suit might have been prosecuted in such court to recover the said contents if no assignment had been made.”

■The contention of plaintiff necessarily involves tbe assumption that, bad tbe National Bank of Wilmington never assigned the note- in litigation, tbe receiver would bave been entitled to sue in tbe federal court, not as assignee, but in some other capacity, —say, as agent of tbe bank and of its creditors. That being assumed for tbe purpose of tbe argument, plaintiff’s contention is-that be may sue in tbe federal court, because tbe suit might bave been prosecuted in such court by the receiver if tbe assignment bad not been made to himself. This is not tbe construction put upon tbe sentence by tbe reported cases. In every instance in ■which, it is attempted to put the idea in other words it is assumed that the statute says that the assignee may sue in the federal court only in case the suit might have been brought there by the original payee liad there been no assignment. That this is the obvious meaning of the clause is evident from the fact that such a construction is put upon it alike by judge, reporter, and codifier, when any of them have occasion to paraphrase it. The , editor of the Supplement to the Revised Statutes of 1891, in his marginal syllabus, abridges it into the following words: “Suits by assignee not to be entertained unless assignor might have sued,” etc. The reporter of Gibson v. Chew, 16 Pet. 315, gives as the headnote of that case:

‘■Under the eleventh section of the judiciary' acts the indorsee of a negotiable promissory note cannot sue in llie circuit court if the maker and payee were, at the time the action was brought, citizens of the same state.”

In tho first case arising under this clause — that of Turner v. Bank, 4 Dall. 8—Ellsworth, C. J., says It is necessary, where the defendant appears to be a citizen of one state,, if .the suit be on a promissory note by an assignee, to show that the original promisor is a citizen of some other state; and in the very late case of Parker v. Ormsby, 141 U. S. 81-84, 11 Sup. Ct. Rep. 912, Harlan, J., says:

“It was settled by many decisions under the act of 1789 that a circuit court of the United States had no jurisdiction of a suit brought against the maker by the assignee of a promissory note payable to order unless it appeared ;• fiirmaiively that it could have been maintained in that court in the name of the ,original payee.”

The sume construction is given by Miller, J., in Bradley v. Rhines' Adm’rs, 8 Wall. 393-396, and by Strong, J., in Morgan’s Ex’r v. Gay, 19 Wall. 81. While this construction of the section was not strictly essential to the decision of the court in any of the cases cited, the fact that such an interpretation has been so uniformly put upon the words of the danse is persuasive of the meaning that must have been in the minds of the legislators who adopted them.

The court holds:

First: That the receiver of the First National Rank of Wilmington possesses, and is entitled to sue upon, the dioses in action of the bank by assignment or transfer, and that consequently plaintiff, who is assignee of a promissory note made between parties who, at the commencement of the action, were citizens of the same state, cannot bring this action to recover its contents in a federal court.

Second. That the true intent and meaning of the term, “unless such suit might have been prosecuted to recover the said contents if no assignment or transfer had been made,” are set forth in the reason assigned by defendant for his demurrer, viz.: “The assignor, being a resident of the same state as the defendant, could not have maintained a suit thereon if such assignment had not been made.”

Judgment may be entered dismissing the action for want'.of jurisdiction.  