certificate on January 9th, credited Denison, Prior & Co.'s account with the stock so received, making a net credit on account of the transaction of $2,057.50. On the 9th of January the books of Denison, Prior & Co. showed Harmon to be owing said firm the sum of $5,400, and that the firm were carrying for his account 25 shares of Guardian Savings & Trust Company stock; that Denison, Prior & Co. did not pay Wright, McLeod & Baker any part of the purchase price of the 25 shares of Guardian Savings & Trust Company stock, and at the suspension of Denison, Prior & Co. on January 10, 1906, said shares of stock were still in the possession of Wright, McLeod & Baker, and were held by said firm subject to the rules of the Cleveland Stock Exchange, which provide that, on suspension of a member of the exchange, the sale could be closed out and any deficiency resulting therefrom should be a lien on the seat of the firm so becoming insolvent; that, instead of closing out said sale, the same was canceled, and no loss resulted to Denison, Prior & Co., and no charge was made against the seat of said firm on the Cleveland Stock Exchange. In closing out Mr. Harmon's account, Denison, Prior & Co.'s books credited him with the sum of $7,556.25, leaving Mr. Harmon with a net credit of $2,136.25. It further appears that the credit balance in the possession of Finley, Barrel & Co. was insufficient to pay to the customers of Denison, Prior & Co. the amount of their interest in the securities held by Finley, Barrel & Co. as collateral to their account with Denison, Prior & Co.; that is, Denison, Prior & Co. had pledged said securities with Finley, Barrel & Co. for a greater sum than the securities had been pledged by the customers with Denison, Prior & Co. As to the claim of Horace B. Corner: Reduced to its simplest form these are the facts in the Corner case: November 24, 1905, he gave an order to Denison, Prior & Co. to purchase for him 50 shares of Quaker Oats stock. This order was telegraphed to Finley, Barrel & Co. at Chicago, and on the same day the purchase was made by that firm. Certificates for the stock were taken by it in completion of the purchase, and the same were held, as by custom it had a right to do, as security on the general account of Denison, Prior & Co. Within a day or two a bill was rendered to Corner by Denison, Prior & Co. for $6,631.25, being the price of the stock and commissions, which was thereupon paid. At the time payment was made Denison, Prior & Co. were instructed by Corner to have the certificate for the stock transferred to him, and this they agreed to do. A few days later Corner again requested delivery of the certificate, and was informed that it had not been received, but that they would deliver it in a few days when received from the transfer office. All this time the certificate or certificates for the 50 shares purchased for Corner and paid for by him remained in the hands of Finley, Barrel & Co., and continued to remain there until the failure of Denison, Prior & Co. When that occurred, there were other shares of stock in • ther companies in the possession of Finley, Barrel & Co. bought for account of Denison, Prior & Co., in which no person had a certain separable and distinguishable interest, but which belonged to several persons whose separate interests could not be. determined. All the stocks were sold and the proceeds, after settling the indebtedness i Denison, Prior & Co. to Finley, Barrel & Co., are here for distribu-. tion. The Quaker Oats stock sold for $7,146.87, and the gross sur, 153 FEDERAL REPORTER. plus for distribution is $26,211.69. The master held that Corner had no prior claim to the Quaker Oats stock, but that he must be content to share ratably with the other persons interested in the surplus arising after the settlement of Finley, Barrel & Co.'s account. Confusion is likely to arise if we do not bear in mind the fact that Finley, Barrel & Co. may have precisely the same rights in all of the Denison, Prior & Co. stocks in their hands, although Denison, Prior & Co. may, as between themselves and their customers, sustain a very different relation to the same stocks. So far as the questions before us are concerned, the relative rights. of the claimants to the surplus are to be determined by their relations to Denison, Prior & Co. Bearing this in mind, and bearing in mind the custom of brokerage transactions, we have here simply a question wherein, subject only to the rights of the pledgee, we follow the trust property, if we can; and if it may be identified and followed and reached, it must necessarily pass in some form or other into the hands of its owner. We do not resort to a plan of ratable distribution of the proceeds of the sale of the trust property, except where, as among the several owners of the trust property, we are unable to distinguish one part of the trust property from another as being the property of one of the beneficiaries. If, as between a claimant and Denison, Prior & Co., the stock was wrongfully in the possession of Finley, Barrel & Co., then such a claimant is, in the event of a surplus, in a better position than those claimants, as between whom and Denison, Prior & Co., the stock was rightfully in the possession of Finley, Barrel & Co. This, it seems to me, is equity, and the law is not powerless to declare and enforce it. The relation of Corner to the transaction itself and to Denison, Prior & Co. is radically to be distinguished from that which arose between margin traders and Denison, Prior & Co. Corner did not become a co-surety with other claimants or margin traders. The very ingenious and plausible illustration of Judge Caldwell, based upon the theory of co-suretyship, fails, for that reason, it seems to me, to be apposite. As affecting the rights of Corner, the custom of brokerage transactions is unimportant, except as to the right of Finley, Barrel & Co. to hold the stock purchased as collateral to Denison, Prior & Co.'s account. Beyond that the right of the owner of the stock is determined by the general rules of law. These shares were Corner's. They ought to have been taken up by Denison, Prior & Co. Not having been so taken up, Corner's risk was that they might be needed to satisfy the general indebtedness of Denison, Prior & Co. to Finley, Barrel & Co., or that his stock might be indistinguishably mingled with other stocks belonging to persons similarly situated, and any delay on the part of Corner to effectually assert his claim of ownership could have no other effect adverse to him than to increase the risk of being unable to identify his property. Suppose that Corner had served notice on Finley, Barrel & Co. that he was the owner of the 50 shares of Quaker Oats stock, and the proceeds of the sale of the Quaker Oats stock not being necessary to pay the indebtedness of Denison, Prior & Co. to Finley, Barrel & Co., what would have been the rights of Corner? They are defined by the case of Le Marchant v. Moore, 150 N. Y. 209, 44 N. E. 770, and, as it seems to me, by the general principles of law and the demands of justice. Save only as subject to the rights of Finley, Barrel & Co., as pledgee, the title had passed to Corner. Only formal transfer was needed to complete the transaction. The trust was, with exact certainty, impressed upon the very shares of stock in the possession of Finley, Barrel & Co., and in order to justify the conclusion that these shares of stock or their proceeds belonged to Corner, we do not need to resort to the modern enlargement of the rule of following a trust fund, as declared in Knatchbull v. Hallett, 13 Ch. D. 696, and Bank v. Insurance Company, 104 U. S. 54, 26 L. Ed. 693. (3) As As between him and the other claimants the points of distinction are: (1) Corner had bought and paid for certain shares of stock; the other claimants had not. (2) Corner's stock could be identified and separated from the mass; that of other claimants could not between Corner and Denison, Prior & Co., the latter had no right to leave the stock in pledge; as between other claimants and Denison, Prior & Co., the latter had the right to leave the stock in pledge. The right of Corner is prior, both to his fellow claimants, and to general creditors; the right of his fellow claimants is prior to general creditors. Thus is equity done to all concerned. It seems to me, therefore, clear that, subject to the rights of Finley, Barrel & Co., Corner was, at the time of the failure of Denison, Prior & Co., entitled to possession of the 50 shares of the Quaker Oats tock, which had been bought for him, and that he is now entitled to the proceeds of the sale of that stock. As to the claim of Frank S. Harmon: An analysis of the situation created by the Harmon transaction discloses the relation of creditor and debtor between him and Denison, Prior & Co. It is not a case of trusteeship and cestui que trust. There is no following of property. The fact that the fund in the hands of Finley, Barrel & Co. was increased by the amount of the Harmon claim is the same as if an ordinary transaction had occurred whereby money was paid to Denison, Prior & Co., for the purpose of making a purchase, and no purchase was made. The result therefore, is that Harmon is in the unfortunate position of a contributor to a fund which left him in the real position of a mere creditor, and the utmost claim to be made on his behalf would be that so much of this fund as he contributed should pass into the general estate. I think the master was right in holding that Harmon has no claim of preference in the balance growing out of the settlement of account between Finley, Barrel & Co. and Denison, Prior & Co. The exceptions to the finding of the referee as to the claim of Corner are therefore sustained. The exception to his finding as to Harmon is overruled. 153 F.-28 MCGUIRE v. GREAT NORTHERN RY. CO. et al. (Circuit Court, N. D. Iowa, C. D. May 11, 1907.) 1. REMOVAL OF CAUSES-MOTION TO REMAND-ALLEGED FRAUDULENT JOINDER OF DEFENDANTS. On a motion to remand a cause removed by one of a number of defendants, the merits of the controversy can be considered only for the purpose of ascertaining the real nature of the alleged cause or causes of action against the several defendants, and whether or not there has been a fraudulent joinder of parties defendant for the purpose of defeating the jurisdiction of the federal court. [Ed. Note. For cases in point, see Cent. Dig. vol. 42, Removal of Causes, § 227. Fraudulent joinder of parties to prevent removal, see note to Offner v. Chicago & E. R. Co., 78 C. C. A. 362.] 2. CARRIERS-Loss of GOODS-LIABILITY OF CONNECTING CARRIERS. The fact that the destination of a shipment received by a railroad for transportation is beyond its own line, or that it was received from another carrier to be transported to a point on its own line, does not create any joint responsibility between the connecting carriers, where the shipment over each is under a separate contract which limits its liability for loss or injuries to such as may occur on its own line. [Ed. Note.-For cases in point, see Cent. Dig. vol. 9, Carriers, §§ 817, 818.1 3. REMOVAL OF CAUSES-SEPARABLE CONTROVERSY-FRAUDULENT JOINDER OF DEFENDANTS. In an action in a state court, a railroad company of the state, a local station agent on its line, and a railroad company of another state were joined as defendants. The petition alleged that through the joint negligence of defendants a shipper was furnished an unfit car at the local station in which to ship certain goods and to transport the shipper from such station to a point on the line of the second railroad company; that both companies carried the shipper and his property in such car to a point on the line of the second company, where they negligently set the car on fire, and thus caused the death of the shipper and the destruction of his property. On a motion to remand, after removal of the cause by the nonresident company on the ground of separable controversy and fraudulent joinder, treated also as a plea to the jurisdiction, it was shown that the agent who furnished the car was not the agent of, and had no connection with the removing, defendant; that the shipment was received by the local company under a written contract for its carriage only to a connection with the road of the second company, and limiting the liability of the carrier to loss or injury accruing on its own line; that the car was safely delivered to the second company, which received and forwarded it under a similar contract then made between such company and the shipper. The cause of the fire was neither alleged nor shown. Held. that the cause of action stated in the petition, construed in the light of such facts which were known to plaintiff, was not joint, and that the joinder of the defendants must be held to have been for the purpose of de feating the jurisdiction of the federal court. [Ed. Note.-Separable controversy, see note to Robbins v. Ellenbogen, 18 C. C. A. 86; Mecke v. Valleytown Mineral Co., 35 C. C. A. 155.] 4. SAME. The rule that where a removal is sought by one of two or more defendants upon the allegations of the plaintiff's pleading alone, the cause of action as therein stated is the test of removability, and if that is joint in character, and there is no showing of want of good faith on the part of the plaintiff in stating his cause of action, the question of proper joinder is not to be tried in the removal proceedings, has no application where it is alleged and shown by the nonresident defendant that the plaintiff has purposely stated a fictitious cause of action against him and another jointly to prevent a removal, but in such cases the duty of protecting the right of removal to one having such right is strictly enjoined upon the Circuit Courts. On Plea to the Jurisdiction and Motion to Remand to State Court. This action was commenced in the district court of Iowa in and for Palo Alto county, by the plaintiff, a citizen of Iowa, as administratrix of the estate of P. F. McGuire, deceased, against the Minneapolis & St. Louis Railroad Company, hereinafter called the "Minneapolis Company," a corporation of Iowa, C. A. Ziehlke, a citizen of Iowa, and the Great Northern Railway Company, a corporation of Minnesota, to recover damages for the death of said deceased, and the destruction of certain of his personal property, which it is alleged were caused by the joint neglect of the several defendants. The Great Northern Railway Company in due time removed the cause to this court, upon the alleged ground that there is a separable controversy be tween it and the plaintiff, to the determination of which the other defendants are not necessary or proper parties, but have been fraudulently joined by the plaintiff as defendants with the Great Northern Company for the sole purpose of preventing that company from removing the cause to this court. The plaintiff has filed a motion to remand, upon the grounds that there is no separable controversy between her and either defendant, that she has a cause of action against all of the defendants jointly, that the action is brought against all of them in good faith, and that this court is without jurisdiction of the suit. The motion to remand was ordered by the court to stand also as a plea to its jurisdiction, and that the evidence in support of the petition to remove and such plea be taken in the form of depositions. The evidence has been so taken, and the matter is now before the court upon the pleadings and such evidence. The original petition, as amended in the state court, alleges, in substance: That the Minneapolis Company and the Great Northern Company are railroad corporations; that defendant Ziehlke is and was their agent at Ayrshire, in Palo Alto county, this state; that in March, 1906, the deceased, P. F. McGuire, applied to the defendant Ziehlke, as agent for said railroad companies, for a car in which to ship certain household goods, live stock, and hay and straw for such live stock, from Ayrshire, to McCanna, in the state of North Dakota, d in which car he was also to ride with such property. The charge is genral against all of the defendants that they furnished an unfit car in which to make such shipment, and that both companies together carried the deceased and his property therein from Ayrshire to some point on the Great Northern üne, where together they negligently set the car and shipment on fire, and thus ansed the death of McGuire and the destruction of his property while being carried on that line. From the testimony it appears that the Minneapolis Company operates a line of railroad through Ayrshire, a village of some 300 or 400 inhabitants, in Palo Alto county, this state, thence to Minneapolis, in the state of Minnesota, and Cefendant Ziehlke is and was in March, 1906, its agent at Ayrshire; that there is no other railroad at such village; that the Great Northern Company is and ben was a Minnesota corporation, operating a line of railroad from Minnepolis, in that state, northwesterly into and through the state of North Dakota, Ed McCanna is a station on its line of road in that state; that it had no rilroad in Palo Alto county, Iowa, and no office or agency at Ayrshire, or elsewhere in that county; that the deceased then lived at or near the village of Ayrshire, and was about to move his family, household goods, and other proprty to McCanna, N. D., and applied to defendant Ziehlke at Ayrshire for a car n which to ship said property to McCanna; that Ziehlke procured a proper ar for such purpose, but, before the deceased was ready to load his property, et some other shipper have it, and furnished to McGuire another car of the Moneapolis Company, which it is claimed by plaintiff was old, out of repair, bt, and unsafe in which to make such shipment, and Ziehlke told McGuire that he could take that car or none; that McGuire did load his property into such car, and started with it over the line of the Minneapolis Company for Me |