APPEAL from the Circuit Court of the United States for the Southern District of Illinois. The facts are stated in the opinion of the court.
The opinion of the court was delivered by: Mr. Justice Harlan delivered the opinion of the court.
Mr. W. J. Henry for the appellant.
Mr. George A. Sanders, contra.
This suit involves the liability of the township of Harter, in the county of Clay, State of Illinois, upon certain bonds, signed by its supervisor, countersigned by its clerk, and issued, in its name, under date of April 1, 1870. They were each made payable in the sum of $1,000 to the Illinois Southeastern Railway Company or bearer, thirty years after date, with interest at the rate of ten per cent per annum; the right, however, being reserved to the township to make payment at any time after five years from date of issue. Each recites that it is one of a series 'issued by said township to aid in the construction of the Illinois Southeastern Railway, in pursuance of the authority conferred by an act of the General Assembly of the State of Illinois, entitled 'An Act to incorporate the Illinois Southeastern Railway Company, approved Feb. 25, 1867,' and an act amendatory thereof, approved Feb. 24, 1869, and an election of the legal voters of the aforesaid township, held on the tenth day of November, 1868, under the provisions of said act.' Upon each bond also appears the certificate of the State auditor, stating that it had been registered in his office, pursuant to the provisions of the act entitled 'An Act to fund and provide for paying the railroad debts of counties, townships, cities, and towns,' in force April 16, 1869.
The bill was filed in the year 1877, in the Circuit Court for Clay County, by the township of Harter and two of its resident taxpayers,–the latter suing in behalf of themselves and all other taxpayers of the township,–against the State treasurer and auditor, the county clerk and treasurer, the township collector, supervisor, and clerk, and two justices of the township; and also against the 'unknown owners and holders' of such bonds with their coupons, who are alleged to be residents and citizens of States other than Illinois. It proceeded upon the ground that the bonds were issued without authority of law, and, consequently, were not binding upon the township. The prayer of the bill was that such a decree, with perpetual injunction, be rendered as would prevent the State, county, and township officers from taking any steps towards the assessment and collection of taxes to meet the bonds or any instalment of interest thereon; that the holders and owners of the bonds and coupons, their agents and attorneys, be required to bring the same into court for cancellation; and that the State and county treasurers be ordered to pay over to the township any money in their hands which had been raised by taxation for the payment of the bonds or their coupons. The officers who were sued, although duly served with process, made no defence. The unknown holders and owners of the bonds and coupons were proceeded against by publication in the manner authorized by the State law. A final decree was entered on the first day of May, 1879, giving relief to the full extent prayed for.
On the seventeenth day of April, 1880, Kernochan, the owner of all the bonds and coupons issued by the township,–having, it is conceded, acquired them before due, paying value therefor, and without notice of any defence except that appearing in the law and upon the face of the bonds themselves,–presented to the State court a petition stating that he had neither been summoned nor served with a copy of the bill, nor received any notice of the pendency of the suit. Upon that petition he based a motion to redocket the cause and open the decree, to the end that he might be heard touching the matters of such suit. His application was granted, and upon the same day he filed another petition, accompanied by a bond in the required form, asking the removal of the cause to the Circuit Court of the United States, upon the ground that the controversy was between citizens of different States, and that he was then, as well as at the commencement of the suit, a citizen of Massachusetts, while the complainants, during the same period, were citizens of Illinois.
The State court approved the bond and ordered the cause to be certified to the Federal court, with all the papers pertaining thereto.
In the Circuit Court the complainants entered a motion to remand the cause to the State court, which was overruled. Kernochan answered to the merits, and to that answer a general replication was filed. Upon final hearing, the injunction granted by the State court was dissolved and the bill dismissed. The township appealed.
Preliminary to any consideration of the questions involving the validity of the bonds, as obligations of the township, it is proper that we should notice, briefly, some remarks made by counsel for the appellant, in reference as well to the proceedings in the State court after the appearance of Kernochan, as to the removal of the suit into the Federal court.
We perceive nothing irregular or erroneous in the action of the State court, whereby the cause was redocketed and the decree opened. By the statutes of the State, when a final decree is entered against a defendant who has not been summoned, or served with a copy of the bill, or received the notice required to be sent to him by mail, and such person, his heirs, devisees, executors, administrators, or other legal representatives, as the case may require, shall, within one year after notice in writing is given him of such decree, or, in the absence of such notice, within three years after such decree, appear in open court and petition to be heard touching the matters of such decree, and shall pay such costs as the court shall deem reasonable in that behalf, 'the person so petitioning may appear and answer the complainant's bill; and thereupon such proceedings shall be had as if the defendants had appeared in due season and no decree had been made. And if it shall appear upon the hearing that such decree ought not to have been made against such defendant, the same may be set aside, altered, or amended, as shall appear just; otherwise, the same shall be ordered to stand confirmed against said defendant.' Hurd's Stat. Ill., 1880, p. 189, sect. 19. Kernochan appeared within one year after the decree had been passed. He was, therefore, entitled, according to any reasonable construction of the statute, to be heard touching the matters of the decree, as if no decree had been made. When the order was made opening the decree, he acquired a position in which he could take any step that might have been taken had he appeared in due season in obedience to a summons. The court was at liberty to proceed as if no decree had been made against him. He could have demurred, pleaded, or answered, or, the suit being removable into the Circuit Court of the United States, have filed a petition and bond as required by law in such cases. The contention of counsel for appellants is, in effect, that, until Kernochan answered the bill, the State court was without jurisdiction to proceed as if he had 'appeared in due season and no decree had been made.' But such a construction of the statute is too technical and is scarcely admissible where the party appearing, and who has been proceeded against by publication only, is a citizen of another State, entitled under the Constitution and laws of the United States to remove the cause from the State court. The utmost which could be claimed in such cases (and we do not say that such a claim could be sustained) is, that the State court might, in its discretion, decline to open the decree, or to hear the defendant, unless he presented an answer to the bill. In this case, the motion of Kernochan to redocket the cause and open the decree was granted, without requiring him to file an answer, disclosing his defence to the suit. We are not prepared to say that the State court erred in its ruling. We should, under the circumstances, assume that the State court correctly interpreted the local statute. If, therefore, the suit was removable, the Federal court, upon its removal, and after the pleadings were made up, and proofs taken upon the issues made by Kernochan, had the power to set aside, alter, or amend the decree as might be just, or adjudge that it stand confirmed as entered in the State court. Upon his appearance in the State court the suit became, as to him, for all practical purposes, a new suit, to be conducted, however, subject to the authority of the court to confirm the former, instead of entering a new, decree.
We do not doubt that the suit was one which the defendant was entitled, under the act of March 3, 1875, c. 137, to remove from the State court. Disregarding, as we may do, the particular position, whether as complainants or defendants, assigned to the parties by the draughtsman of the bill, it is apparent that the sole matter in dispute is the liability of the township upon the bonds; that upon one side of that dispute are all of the State, county, and township officers and taxpayers, who are made parties, while upon the other is Kernochan, the owner of the bonds whose validity is questioned by this suit. He alone, of all the parties, is, in a legal sense, interested in the enforcement of liability upon the township. It is, therefore, a suit in which there is a single controversy, embracing the whole suit, between citizens of different States, one side of which is represented alone by Kernochan, a citizen of Massachusetts, and the other by citizens of Illinois. Removal Cases, 100 U. S. 457.
But it is contended that the petition of Kernochan, for the removal of the suit, was not filed within the time prescribed by the act, that is, at the term at which the cause could be first tried. The argument is, that Kernochan, although not advised, in any legal mode, of the pendency of the suit, was at liberty to appear therein before the decree was entered, and, consequently, that he did not seek its removal at or before the term at which the cause could have been first tried; that his appearance, and filing his petition praying to be heard touching the matters of the decree, have relation to the time when he should have appeared in court, had he been duly summoned. The bare statement of this proposition suggests its refutation. When the defendant would have been summoned had he been within the local jurisdiction of the State court, we are not informed; and, consequently, it is difficult to ascertain, upon the theory of appellant's counsel, when he should have appeared in court. It is sufficient to say, that the defendant, within the period fixed by the statute, appeared and secured the opening of the decree. The first term thereafter, at which the cause could properly have been tried, upon the merits, as to him, was the term at which, within the meaning of the act, he should have filed his petition for removal. And it was so filed.
We come now to the consideration of questions involving the merits of the cause.
We have seen that the bonds recite that they were issued in pursuance as well of the authority conferred by the act of Feb. 25, 1867, incorporating the Illinois Southeastern Railway Company, and the act of Feb. 24, 1869, amendatory thereof, as of an election of the ...